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Date Journal Entry Accounts and Explanations 1 Accounts Receivable Debit Credit May 300 Service Revenue 300 Collected an account receivable. 2 Rent Expense 18,000 Cash 18,000 Paid monthly rent, $1,800. 5 Cash 2,600 Accounts Receivable 2,600 Collected cash for services provided. 3,500 10 Supplies Accounts Payable Purchased office equipment on account. 3,500 16 Dividends 4,900 Cash 4,900 Paid salaries. 25 Accounts Receivable 4,400 Cash 4,400 Paid for supplies purchased earlier on account. Requirement 1. For each of the preceding entries, indicate the effect of the error on cash, total assets, and net income. The answer for the first transaction has been provided as an example. (If the error has no effect, select "Correct" and leave the amount field blank.) Date Effect on Cash Effect on Total Assets Effect on Net Income May 1 $ 300 Overstated $ 300 Overstated $ 300 Understated Understated 2 16200 Correct Understated 16200 5 Correct Understated 2600 Understated 2600 10 Correct Correct Understated 3500 16 Correct Correct Overstated 4900 25 Understated 1800 Understated 4400 Requirement 2. What is the correct balance of cash if the balance of cash on the books before correcting the preceding transactions was $6,600. The correct cash balance is 24900 Requirement 3. What is the correct amount of total assets if the total assets on the books before correcting the preceding transactions was $29,000? The correct amount of total assets is 35700 Requirement 4. What is the correct net income for May if the reported income before correcting the preceding transactions was $10,000? The correct net income for May is 27100

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