Question

The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($34,900) and (b) accrued wages ($12,770). If the net income for the current year had been $196,400, what would have been the correct net income if the proper adjusting entries had been made?

Answer 1

The correct net income is $218,530

Step-by-step explanation:

The computation of the correct net income is shown below:

= Current year net income + unearned revenue earned - accrued wages

= $196,400 + $34,900 - $12,770

= $218,530

The unearned revenue earned should be added in the net income whereas the accrued wages is an expense which should be deducted in the net income