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Question 3.8: Effects of Adjustments For the year ending December 31, 2019...

Effects of Adjustments

For the year ending December 31, 2019, Mann Medical Co. mistakenly omitted adjusting entries for (1) $8,600 of unearned revenue that was earned, (2) earned revenue of $12,500 that was not billed, and (3) accrued wages of $2,900. Indicate the combined effect of the errors on (a) revenues, (b) expenses, and (c) net income for the year ended December 31, 2019.

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a. Revenues were understated by $21,100 ($8,600 + $12,500).
b. Expenses were understated by $2,900.
b. Net income was understated by $18,200 ($8,600 + $12,500 – $2,900).

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