Calculate the year-end corrected balances


On December 31, 2008 Tie One On reported net income for the year of $265,000 and the following account balances:

  • Cash: $175,000
  • Accounts receivable: $21,000
  • Prepaid rent: $6,000
  • Equipment and furnishings: $230,000
  • Accumulated Depreciation-equipment and furnishings: ($43,000)
  • Accounts payable: $13,000
  • Owners' equity (including net income of $265,000): $337,000

After this information was -prepared, the bookkeeper discovered that they failed to prepare two adjusting entries. These were not reflected in the balances shown. Here is the information on these two entries:

1. The prepaid rent account was paid on April 1, 2008 for one year for $6,000. The account has not been adjusted since.
2. A bill received in January 2009 for utilities incurred in December 2008 for $1,400 was mistakenly not entered into the system.

Calculate the year-end corrected balances for the following three accounts: Assets, liabilities, and equity.

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Accounting Basics: Calculate the year-end corrected balances
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