Learn to Play, Inc., is a one-person company that provides private piano lessons. Its unadjusted trial balance at December 31, 2018, follows, along with information about selected accounts.

Required:

1. Calculate the (preliminary) unadjusted net income for the year ended December 31, 2018.

2. Name the five pairs of balance sheet and income statement accounts that require adjustment and indicate the amount of adjustment for each pair.

3. Prepare the adjusting journal entries that are required at December 31, 2018.

4. Calculate the adjusted net income that the company should report for the year ended December 31, 2018. By what dollar amount did the adjustments in requirement 3 cause net income to increase or decrease?

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Account Names Debit Credit Further Information $ 23,800 Cash As reported on December 31 bank statement. 300 Based on count, only $200 of supplies still exist. Supplies $ 1,500 Of this amount, $500 was received for December lessons and $1,000 for January lessons. The employee was paid $500 for 10 days of work through December 29. She has not yet been paid for work on December 30 and 31. Deferred Revenue Salaries and Wages Payable Income Tax Payable The company has paid last year's income tax but not this year's taxes. Interest Payable The company has not paid the $100 of interest owed on its notes payable for the current period. Notes Payable 12,000 This one-year note was taken out this year on December 1. Common Stock 1,000 This amount was contributed for common stock in prior years. This is the balance reported at the end of last year. Retained Earnings 3,000 Service Revenue 25,500 Most customers pay cash for lessons each time they are provided, but some customers pay in advance. Salaries and Wages Expense The company's employee worked through December 31. 18,100 This is the cost of supplies used through November 30. Supplies Expense 800 Interest Expense The company has not paid the $100 of interest owed on its notes payable for the current period. Income Tax Expense The company has an average tax rate of 30%. $43,000 $43,000 Totals