identifying and preparing adjusting journal entries 460214

PB4-4 Learn to Play December 31, 2010

Account names Debit Credit

Cash $23,800 as reported on December 31 bank statement

Supplies 300 based on count only $200 supplies still exist

Unearned revenue $1,500 of this amount, $500 received in December lessons and $1,000 for January

Lessons

Wages Payable 0 employee paid $500 for 10 days as of 12/28 not pd 12/29-12/30

Income tax payable 0 paid last year not this year yet

Interest payable 0 paid $100 interest owed on note payable for current period

Notes payable $12,000 one-year note taken out December 1

Contributed capital 1,000 contributed in prior years

Retained earnings 3,000 balance reported at the end of last year

Lesson revenue 25,500 cash when provided, but some customers paid in advance

Wage Expense 18,100 work through December 30, but didn’t work 12/31

Supplies Expense 800 cost of supplies used through November 30

Interest Expense 0 the company hasn’t paid $100 interest owed on the note payable for the current period

Income Tax expense 0

Totals $43,000 $43,000

REQUIRED

Calculate the (preliminary) unadjusted net income for the year ending December 31,2010

Prepare adjusting journal entries that are required at December 31,2010

Calculate the adjusted net income that the company should report for the year ending December 31,2010. By how much did the adjustments in requirement (4) cause net income to increase or decrease?