141.
Primo
Landscaping commenced its business on January 1, 2014. On December 31, 2014,
Primo Landscaping did not record any adjusting entries with respect to the
following transactions:
a. During the first
year of its operations, Primo purchased supplies in the amount of $10,000
(debited to “Supplies expense”), and of this amount, $3,000 were
unused as of December 31, 2014.
b. On March 15, 2014
Primo received $18,000 for landscape maintenance services to be rendered for
24 months (beginning July 1, 2014). This amount was credited to
“Landscaping revenue.”
c. The company’s
fuel bill for $1,500 for the month of December 2014 was not received until
January 15, 2015.
d. The company
borrowed $100,000 from First Bank on April 1, 2014 at an interest rate of 12%
per year. The principal, along with all of the interest, is due on March 30,
2015.
e. On January 17,
2014 the company purchased a backhoe for $65,000. The backhoe is expected to
last for 10,000 hours and have no salvage value. During 2014, Primo operated
the backhoe for 500 hours.
Required:
Complete the table
below, showing the effect of the omission of each year-end adjusting entry on
assets, liabilities, and net income. Use “OS” for overstated,
“US” for understated, and “NE” for no effect.
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