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Effects of Adjusting Entries on the Accounting Equation
Refer to the information provided for Matlock Graphic Arts Studio in Problem 4-6A.
Required
1. Prepare a table to summarize the required adjusting entries as they affect the accounting equation. Use the format in Exhibit 3-1 on page 109. Identify each adjustment by letter.
2. Compute the net increase or decrease in net income for the month from the recognition of the adjusting entries you prepared in part (1). (Ignore income taxes.)
The amount of unrealized intercompany profit in ending inventory at December 31, 2006 that should be eliminated in the consolidation process is:
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