The account balances for the Pittman International Company on January 31, 20X1, follow. The balances shown are after the first month of operations.

INSTRUCTIONS
1. Prepare the Trial Balance section of the worksheet.
2. Record the following adjustments in the Adjustments section of the worksheet:
a. Supplies used during the month amounted to $1,050.
b. The amount in the Prepaid Insurance account represents a payment made on January 1, 20X1, for six months of insurance coverage.
c. The equipment, purchased on January 1, 20X1, has an estimated useful life of 10 years with no salvage value. The firm uses the straight-line method of depreciation.
3. Complete the worksheet.
4. Prepare an income statement, statement of owner’s equity, and balance sheet (use the report form).
5. Record the balances in the selected general ledger accounts, then journalize and post the adjusting entries. Use 3 for the journal page number.
Analyze: If the useful life of the equipment had been 12 years instead of 10 years, how would net income have been affected?

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101 Cash 111 Accounts Receivable Supplies Prepaid Insurance Equipment Accum. Depr.-Equip. Accounts Payable 121 131 141 142 202 301 302 Reginald Pittman, Capital Reginald Pittman, Drawing $18,475 401 3,400 511 2,150 514 15,000 517 24,000 518 0 519 6,000 520 40,000 523 2,000 524 Fees Income Advertising Expense Depr. Expense-Equip. Insurance Expense Rent Expense Salaries Expense Supplies Expense Telephone Expense Utilities Expense $30,925 1,500 0 0 2,500 6,700 0 350 850