2-27

Name: SOLUTION To enter the journal entries, enter the appropriate account titles in the shaded cells in columns D and E, and the appropriate amounts in the shaded cells in columns H and J.

1) Adjusting Entries on 12/31/2002 (a) Accounts Payable Cash Depreciation Expense Accumulated Depreciation - Building Doubtful Accounts Expense Allowance for Doubtful Accounts Interest Receivable Interest Revenue Sales Revenue Unearned Sales Revenue Discount on Notes Payable Interest Expense 2,900 2,900 6,000 6,000 1,310 1,310 2,000 2,000 6,800 6,800 300 300

(b)

(c)

(d)

(e)

(f)

2) Net Change in Income: Interest revenue not recorded Add overstatement of interest expense Deduct: Depreciation expense Doubtful accounts expense Overstatement of sales revenue Net reduction in reported net income

$ 2,000 300 $ 6,000 1,310 6,800

2,300

$ (14,110) $ (11,810)