1.Prepare the adjusting journal entries for highlight styling 2. Calculate net i

Question

1.Prepare the adjusting journal entries for highlight styling 2. Calculate net infom before and after adjustments Highlight styling unadjusted trial balance for the current year follows:
Highlight Styling Trial Balance December 31 Cash.. Prepaid insurance Shop supplies S 2,200 1,680 790 3,860 Shop equipment Accumulated depreciation-shop equipment Building.. Accumulated depreciation-building. Land s 770 59,500 55,000 Long-term notes payable Common stock 50,000 40,000 8,860 2,400 23,400 Rent eaned Fees earned .. Wages expense Utilities expense Property taxes expense... Interest expense Totals 3,200 690 600 $131.570 $131.870 Additional information: a. An insuran policy examination showed $1,040 of expired insurance. b. An inventory count showed $210 of unused shop supplies still available. c. Depreciation expense on shop equipment, $350 d. Depreciation expense on the building, $2,020. s A beautician is behind on space rental payments, and this $200 of accrued ues was unrecorded at the time the trial balance was prepared f. $800 of g. The one empl The employce was pa she has not been paid the Unearned Rent account balance was still unearned by year-end. ovee, a receptionist, works a five-day workweek at $50 per day id last week but has worked four days this week for which taxes, totaling $450, have accrued. This additional of property tane payable, S600, has accrued but is unrecorded. armoun monti's interest on the note payable, $600,has accrued but is

Explanation / Answer

Highlight Styling Income Statement before Adjustment 31-Dec In $ Fees Earned 23400 Rent Earned 2400 Total Revenue 25800 Less : Expenses Wages Expense 3200 Utilities Expense 690 Property taxes expense 600 Interest expense 4350 8840 Net Income 16960 Highlight Styling Trial Balance After Adjustment 31-Dec Before Adjustment Adjustments Total Debit Credit Debit Credit Debit Credit Cash $ 2200 2200 0 Prepaid Insurance 1680 1680 Shop Supplies 790 580 210 Shop Equipment 3860 3860 Accumulated depreciation - Shop equipment 770 350 1120 Building 59500 59500 Accumulated depreciation - Building 3840 2020 5860 Land 55000 55000 Unearned Rent 2600 1800 800 Long - term notes payable 50000 50000 Common stock 40000 40000 Retained earnings 8860 8860 Rent earned 2400 2000 4400 Fees earned 23400 23400 Wages expense 3200 200 3400 Utilities Expense 690 690 Property taxes expense 600 450 1050 Interest expense 4350 600 4950 Insurance Expense 1040 1040 Insurance Expense payable 1040 1040 Depreciation - Shop equipment 350 350 Depreciation - Building 2020 2020 Wages payable 200 200 Property taxes payable 450 450 Interest payable 600 600 Supplies expense 580 580 Rent Receivable 200 200 Totals 131870 131870 7240 7240 136730 136730 Highlight Styling Income Statement After Adjustment 31-Dec In $ Fees Earned 23400 Rent Earned 4400 Total Revenue 27800 Less : Expenses Wages Expense 3400 Utilities Expense 690 Property taxes expense 450 Interest expense 4950 Depreciation 2370 Supplies Expense 580 12440 Net Income 15360

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