Question :In recording adjusting entries, Reagan Financial Advisors failed to record the adjusting entries for the following situations: a. Office supplies on hand, \(100. b. Accrued revenues, \)5,000. c. Accrued interest expense, \(250. d. Depreciation, \)800. e. Unearned revenue that has been earned, $550. Determine the effects on the income statement and balance sheet by identifying whether assets, liabilities, equity, revenue, and expenses are either overstated or understated. Use the following table. Adjustment a has been provided as an example.Adjustment Not Recorded (a) Overstated Overstated Understated Assets Liabilities Equity Revenue Expenses Balance Sheet Income Statement

If adjusting entry for ending supplies is not record, then supplies expense will be reduced, and net income will be increased, which will increase equity. Also it will increase the supplies balance in asset section.

If accrued revenues are not recorded, then it will decrease revenue, which will decrease equity. Also it will decrease the accounts receivable under asset section.

If accrued expense is not recorded, it will reduce the expenses and will increase the net income. As net income is increased it will increase equity. Also it will decrease expense payable under liabilities section.

If depreciation expense is not recorded, it will reduce the expenses and will increase the net income. As net income is increased it will increase equity. Also it will increase assets balance in balance sheet.

If revenue is not recognized out of unearned revenues, then it will decrease revenue, which will decrease equity. Also it will increase the unearned revenue under liabilities section of balance sheet.