Fundamentals of Financial Accounting: PB4-4 Learn to Play, Inc. is a one-person company

Fundamentals of Financial Accounting
PB4-4 Identifying and Preparing Adjusting Journal Entries Learn to Play, Inc. is a one-person company that provides private piano lesson.s Its unadjusted trial balance at December 31, 2010, follows along with information about selected accounts.
Account Names Debit Credit Further Information:
Cash 23,800 As reported on December 31 bank statement Supplies 300 Based on count, only $200 of supplies still exist Unearned Revenue 1,500 Of this amount, $500 was received for December lessons and $1,000 for January lessons. Wages Payable - The employee was paid $500 for 10 days of work through December 8. She has not yet been paid for work on December 29, and 30. Income Tax Payable - The company has paid last year's income taxes but not this year's taxes. Interest Payable - The company has not been paid the $100 of interest owed on its note payable for the current period. Note Payable 12,000 This one-year note was taken out this year on December 1. Contributed Capital 1,000 This amount was contributed to the company in prior years. Retained Earnings 3,000 This is the balance reported at the end of last year. Lesson Revenue 25,500 Most customers pay cash for lessons each time they are provided, but some customers paid in advance. Wages Expense 18,100 The company's employee worked through December 30, but did not work on December 31. Supplies Expense 800 This is the cost of supplies used through November 30. Interest Expense - The company has not paid the $100 of interest owed on its note payable for the current period. Income Tax Expense - The company has an average tax rate of 30 percent. Totals $43,000 $43,000

Required:
1. Calculate the (preliminary) unadjusted net income for the year ended December 31, 2010.
2. Name the five pairs of balance sheet and income statement accounts that require adjustment.
3. Calculate the desired balances for each account listed in the unadjusted trial balance.
4. Prepare the adjusted net income that the company should report for the year ended December 31, 2010. By how much did the adjustments in requirement (4) cause net income to increase or decrease?
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