Preparation of Adjusting Entries}

Balint Photographic Services takes wedding and graduation photographs. At December 31, the end of Balint's accounting period, the following information is available:

a. All wedding photographs are paid for in advance, and all cash collected for them is credited to unearned service revenue. Except for a year-end adjusting entry, no other entries are made for service revenue from wedding photographs. During the year, Balint received \(\$ 42,600\) for wedding photographs. At year-end, \(\$ 37,400\) of the \(\$ 42,600\) had been earned. The beginning-of-the-year balance of unearned service revenue was zero.

b. During December, Balint photographed 225 members of the next year's graduating class of Shaw High School. The school has asked Balint to print one copy of a photograph of each student for the school files. Balint delivered these photographs on December 28 and will bill the school \(\$ 5.00\) per student in January of next year. Revenue from photographs ordered by students will be recorded as the orders are received during the early months of next year.

c. Equipment used for developing and printing was rented for \(\$ 22,500\). The rental term was for one year beginning on August 1 and the entire year of rent was paid on August 1. The payment was debited to prepaid rent.

d. Depreciation on the firm's building for the current year is \(\$ 9,400\).

e. Wages of \(\$ 4,170\) are owed but unpaid and unrecorded at December 31 .

f. Supplies at the beginning of the year were \(\$ 2,400\). During the year, supplies costing \(\$ 19,600\) were purchased. When the purchases were made, their cost was debited to supplies. At year-end a physical count indicated that supplies costing \(\$ 4,100\) were on hand.

\section*{Required:}

1. Prepare the adjusting entries for each of these items.

2. By how much would net income be overstated or understated if the accountant failed to make the adjusting entries?

\section*{Problem