On December 31, 2014, Fawzi Company prepared an income statement and balance sheet and failed to take into account four adjusting entries. The income statement, prepared on this incorrect basis, reflected pretax income of $65,000. The balance sheet (before the effect of income taxes) reflected total assets, $185,000; total liabilities, $90,000; and stockholders’ equity, $95,000. The data for the four adjusting entries follow:a. Wages amounting to $37,000 for the last three days of December 2014 were not paid and not recorded (the next payroll will be on January 10, 2015).b. Depreciation of $19,000 for the year on equipment that cost $190,000 was not recorded.c. Rent revenue of $10,500 was collected on December 1, 2014, for office space for the period December 1, 2014, to February 28, 2015. The $10,500 was credited in full to Unearned Rent Revenue when collected.d. Income taxes were not recorded. The income tax rate for the company is 30 percent.Required:Complete the following tabulation to correct the financial statements for the effects of the four errors (indicate deductions withparentheses):
View Solution:
On December 31 2014 Fawzi Company prepared an income statement