Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 35

Identifying and Preparing Adjusting Journal Entries
Learn to Play, Inc., is a one-person company that provides private piano lessons. Its unadjusted trial balance at December 31, 2013, follows along with information about selected accounts.

Required:
1. Calculate the (preliminary) unadjusted net income for the year ended December 31, 2013.
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 adjusting journal entries that are required at December 31, 2013.
5. Calculate the adjusted net income that the company should report for the year ended December 31, 2013. By how much did the adjustments in requirement (4) cause net income to increase or decrease