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?