Shayla Green owns Creative Designs. The trial balance of the firm for January 31, 20X1, the first month of operations, is shown below.

End-of-the-month adjustments must account for the following items:

1. Supplies were purchased on January 1, 20X1; inventory of supplies on January 31, 20X1, is $3,200.
2. The prepaid advertising contract was signed on January 1, 20X1, and covers a four-month period.
3. Rent of $4,200 expired during the month.
4. Depreciation is computed using the straight-line method. The equipment has an estimated useful life of 10 years with no salvage value.

Required:

1. Complete the worksheet for the month.
2. Prepare an income statement, statement of owner’s equity, and balance sheet. No additional investments were made by the owner during the month.
3. Journalize and post the adjusting entries.

Analyze:

If the adjusting entries had not been made for the month, by what amount would net income be overstated or understated?

 

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Complete this question by entering your answers in the tabs below. Req 2 Inc Stmt Req 2 Stmt of OE Complete the worksheet for the month. Req 1 Account Name Cash Accounts receivable Supplies Prepaid advertising Mepard Prepaid rent pa Equipment Accumulated depreciation-Equipment Accounts payable Shayla Green, Capital Shayla Green, Drawing Fone income Fees income Advertising expense Depreciation expense-Equipment Rent expense Salaries expense Supplies expense Utilities expense Sub-totals Totals Req 2 Bal Sheet $ $ Trial Balance Debit 73,000 27,200 19,500 24,800 50,400 67,200 16,000 Reg 3 Gen Journal 21,400 Credit Reg 3 Ledgers 33,100 122,000 148,200 3,800 303,300 $ 303,300 Analyze Debit CREATIVE DESIGNS Worksheet Month Ended January 31, 20X1 Adjustments Credit < Req 1 Adjusted Trial Balance Debit Credit Req 2 Inc Stmt > Income Statement Debit Credit Balance Sheet Credit Debit Complete this question by entering your answers in the tabs below. Req 2 Inc Stmt Req 2 Stmt of OE Complete the worksheet for the month. Req 1 Account Name Cash Accounts receivable Supplies Prepaid advertising Mepard Prepaid rent pa Equipment Accumulated depreciation-Equipment Accounts payable Shayla Green, Capital Shayla Green, Drawing Fone income Fees income Advertising expense Depreciation expense-Equipment Rent expense Salaries expense Supplies expense Utilities expense Sub-totals Totals Req 2 Bal Sheet $ $ Trial Balance Debit 73,000 27,200 19,500 24,800 50,400 67,200 16,000 Reg 3 Gen Journal 21,400 Credit Reg 3 Ledgers 33,100 122,000 148,200 3,800 303,300 $ 303,300 Analyze Debit CREATIVE DESIGNS Worksheet Month Ended January 31, 20X1 Adjustments Credit < Req 1 Adjusted Trial Balance Debit Credit Req 2 Inc Stmt > Income Statement Debit Credit Balance Sheet Credit Debit