Business, 16.10.2020 14:01 jalenevoyles

Val's Hair Emporium operates a hair salon. Its unadjusted trial balance as of December 31, 2013, follows along with information about selected accounts. Account Names Debit Credit Further Information
Cash $3,100 As reported on December 31 bank statement.
Supplies 3,600 Based on count, only $950 of supplies still exist.
Prepaid Rent 3,900 This amount was paid November 1 for rent through the end of January.
Accounts Payable $1,150 This represents the total amount of bills received for supplies and utilities through December 15. Val estimates that the company has received $380 of utility services through December 31 for which it has not yet been
billed.
Wages Payable 0 Stylists have not yet been paid $100 for their work on December 31.
Income Tax Payable 0 The company has paid last year’s income taxes but not this year’s taxes.
Common Stock 1,300 This amount was contributed for common stock in prior years.
Retained Earnings 700 This is the balance reported at the end of last year.
Service Revenue 64,450 Customers pay cash when they receive services.
Salaries & Wages Expense 28,400 This is the cost of stylist wages through December 30.
Utilities Expense 11,500 This is the cost of utilities through December 15.
Rent Expense 13,000 This year’s rent was $1,300 per month.
Supplies Expense 4,100 This is the cost of supplies used through November 30.
Income Tax Expense 0 The company has an average tax rate of 25%.
Totals $67,600 $67,600

Required

a. Prepare the (preliminary) unadjusted net income statement for the year ended December 31, 2013.
b. For each account listed in the unadjusted trial balance, indicate the balance to which the account should be adjusted. (These balances will represent the desired balances to which accounts will later be adjusted).
c. Prepare the adjusting journal entries that are required at December 31, 2013.
d. Prepare the adjusted net income that the company should report for the year ended December 31, 2013
e. By how much did the adjustments in requirement (4) cause net income to increase or decrease?

Answers: 2

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Val's Hair Emporium operates a hair salon. Its unadjusted trial balance as of December 31, 2013, fol...

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