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Renshen Company(“Renshen'”)is an on-line platform that matches tutors with students for private

By December 6, 2021No Comments

Renshen Company(“Renshen'”)is an on-line platform that matches tutors with students for privatetutoring services.The Company charges both students and tutors 5%on the monthly tuition fees asService Revenue and receives payment next month.Besides,the Company uses its website to earnAdvertising Revenue.The company adjusts its accounts monthly and prepares closing entriesannually on 31 December.Below is the unadjusted trial balance dated 31 December 2021:DrCrsCash280,556Accounts Receivable142,300Supplies4,960Prepaid Insurance10.0006%,2-year Note Receivable (due on 31 December 2022)20.000Land680.000Equipment576.000Accumulated Depreciation:Equipment174.0004%,1-year Note Payable (due on 31 December,2021)120,000Accounts Pavable60.316Income Taxes Payable50,000Interest Payable1,200Share Capital Issued (@$2 per share)800.000Retained Earnings128.900Service Revenue1,170.000Advertising Revenue110.000Supplies Expense39,000Depreciation Expense:Equipment24,000Salaries Expense261,000Selling Expense16,000Interest Expense3,600Insurance Expense50,000Rent Expense457,000Income Taxes Expense50,000TOTAL2,614,4162.614.416Refer to the first paragraph of Question 1 Part I on the background information of RenshenCompany.Assume during 2021,the Company recorded the following entries erroneously:(1)Total tuition fees for March was $98,000,the service revenue was accrued and recordedin the same month.When Renshen received payment in April,itDr.Cash$9,800Cr.Service Revenue S9,800.(2)In January Renshen recorded purchase of a new computer at S9,600.Estimated usefullife is three years and the Company uses straight-line depreciation.No one used thecomputer in the first nine months,but starting from October it was used every day by thestaff.Assume Renshen had not updated depreciation since 1 January.On 31 December,itDr.Depreciation expense$800Cr.Accumulated Depreciation $800.(3)Record showed a student owed Renshen S700 for services provided previously.WhenRenshen received this amount in May,itDr.Cash$700Cr.Accounts Payable S700.(4)For the year 2021,Renshen declared and recorded a total dividend of $120,000.Whenrecording closing entries,itDr.Income Summary $120,000Cr.Dividend$120,000.RequiredIdentify the effects of the journal entries made in (1)to (4)above case by case on each of thesix elements of the financial statements per column headings of the table below.Use the symbols“O”for overstate,“U”for understate and“NE”for no effect.No dollaramount is required.Copy the following table to answer this question.Income StatementStatement of Financial PositionRevenueExpenseProfitAssetsLiabilitiesEquity123

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