On September 1, Northhampton Industries signed six-month lease for office space, that is effective September 1. Northhampton agreed to prepay rent and mailed the check for $12,000 to landlord on September 1. Suppose that Northhampton prepares adjustments only four times a year: on March 31, June 30, September 30, and December 31.
Required
Question1) Calculate rental cost for each full month.
Question2) Identify and analyze effect of the transaction for the payment of rent on September 1.
Question3) Identify and analyze effect of the adjustment on September 30.
Question4) Suppose that accountant prepares the adjustment on September 30 but forgets to record an adjustment on December 31. Will net income for the year be understated or overstated? By what amount?