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1 February, 22:29

Problem Page Watson Company's employees earn $290 per day and are paid on Friday for a five-day work week. This year, December 31 is a Thursday. If the appropriate adjusting entry is not made at the end of the year, what will be the effect on: (a) Income statement accounts (overstated, understated, or no effect) ? (b) Net income (overstated, understated, or no effect) ? (c) Balance sheet accounts (overstated, understated, or no effect) ?

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  1. 2 February, 01:01
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    inocme statment:

    wages expense: understate

    net income overstate

    blanace sheet

    wages payable: understate

    Retained Earnings: overstate

    Explanation:

    If the adjusting entry is not made, then the expenses will be lower than it should.

    Thereofre the net income will be overstate as there are more expenses but weren't recorded.

    the balance sheet will not represent accurate the liabilities as there is wages payable which are not recorded.

    also, in the blaance sheet the Retained Earnings account will be overstate as it include the net income which is overstate.
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