Below are three independent and unrelated errors. on december 31, 2017, wolfe-bache corporation failed to accrue office supplies expense of $1,400. in january 2018, when it received the bill from its supplier, wolfe-bache made the following entry: office supplies expense 1,400 cash 1,400 on the last day of 2017, midwest importers received a $82,000 prepayment from a tenant for 2018 rent of a building. midwest recorded the receipt as rent revenue. at the end of 2017, dinkins-lowery corporation failed to accrue interest of $7,200 on a note receivable. at the beginning of 2018, when the company received the cash, it was recorded as interest revenue.
required: for each error: 1. what would be the effect of each error on the income statement and the balance sheet in the 2017 financial statements

1. Balance sheet- understatement to current liability by $1,400 (accrued supplies)

Income statement - overstatement of income by $1,400

2. Balance sheet - understate current liability (unearned revenue) by $82,000

Income statement - overstatement to revenue by $82,000 which also overstates income by same amount

3. Balance sheet - understatement of current asset (interest receivable) by $7,200

Income statement - Understated revenue by $7,200 which will result to understated income by same amount

Explanation:

•Income statement is affected by all transaction with nominal accounts and balance sheet affects all transaction with real accounts.

•Failure to recognize Wolfe-Bache’s accrued supplies expense resulted to understated expense which in turns overstates income by $1,400. In relation to that is an understatement to current liability (accrued supplies expense) by $1,400. Missed entry below:

Dr supplies expense $1,400 (nominal account)

Cr Accrued supplies expense $1,400 (real account)

•Midwest mistake of recognition unearned rent as rent revenue will result to an overstatement of revenue by $82,000 and understatement of current liability (unearned rent income) by $82,000. Adjustment entry below:

Dr Rent revenue $82,000

Cr Unearned rent revenue $82,000

•Dinkins-Lowery’s failure to recognize accrued interest will result to understatement to revenue by $7,200 and understatement to current asset (interest receivable) by $7,200. Entry is Debit interest receivable $7,200 and credit interest revenue $7,200.

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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