Refer to the information provided for Matlock Graphic Arts Studio in Problem 4-6A.

Data from 4-6A

Lori Matlock operates a graphic arts business. A trial balance on June 30, 2014,before recording any adjusting entries, appears as follows:

Other Data
a. The monthly rent is $600.
b. Supplies on hand on June 30, 2014, amount to $1,290.
c. The office equipment was purchased on June 1, 2013. On that date, it had an estimated useful life of ten years and a salvage value of $6,120.
d. Interest owed on the note payable but not yet paid amounts to $50.
e. Salaries of $620 are owed but unpaid to employees at the end of the month.

Required
1. Prepare a table to summarize the required adjusting entries as they affect the accounting equation. Use the format in Exhibit 3-1 on page 109. Identify each adjustment by letter.
2. Compute the net increase or decrease in net income for the month from the recognition of the adjusting entries you prepared in part (1). (Ignore income taxes.)

Transcribed Image Text:

Matlock Graphic Arts Studio Unadjusted Trial Balance June 30, 2014 Debit Credit $ 7,000 Cash Prepaid Rent Supplies Office Equipment Accumulated Depreciation-Equipment Accounts Payable Notes Payable Capital Stock 18,000 15,210 46,120 $ 4,000 1,800 2,000 50,000 Retained Earnings 24,350 Dividends 8,400 Revenue 46,850 Utilities Expense Salaries Expense Advertising Expense 2,850 19,420 12,000 Totals $129,000 $129,000