Exercise 3-5 Analyzing and preparing adjusting entries LO P1, P3 Following are two income statements for Alexis Co. for the year ended December 31. The left number column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts. The middle column shows a blank space for each income statement effect of the eight adjusting entries a through g (the balance sheet part of the entries is not shown here). ALEXIS CO. Income Statements For Year Ended December 31 Revenues Fees earned Commissions earned Total revenues Expenses Depreciation expense-Computers Depreciation expense-office furniture Salaries expense Insurance expense Rent expense Office supplies expense Advertising expense Utilities expense Total expenses Net income Unadjusted Adjustments Adjusted $18,000 a. $25,000 36,500 36,500 $54,500 61,500 b. 1,600 0 c. 1,850 13,500 d. 15,750 e. 1,400 3,800 3,800 0 f. 580 2,500 2,500 1,245 1,335 21,045 $33,455 28,815 $32,685 Analyze the statements and prepare the eight adjusting entries a through g that likely were recorded. Note: Answer for a has two entries () the $7,000 adjustment for Fees Earned, 30 % (or $2,100) has been earned but not billed, and (i) the other 70% (or $4,900) has been earned by performing services that were paid for in advance.