Val’s Hair Emporium operates a hair salon. Its unadjusted trial balance as of 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 $ 3,800 Cash As reported on December 31 bank statement. Based on count, only $1,300 of supplies still exist. Supplies 4,300 This amount was paid November 1 for rent through the end of January. Prepaid Rent 6,000 This represents the total amount of bills received for supplies and utilities through December 15. Val estimates that the company has received $450 of utility services through December 31 for which it has not yet been billed. $ 1,500 Accounts Payable Salaries and Wages Payable Stylists have not yet been paid $150 for their work on December 31. Income Tax Payable The company has paid last year's income taxes but not this year's taxes. This amount was contributed for common stock in prior years. This is the balance reported at the end of last year. Common Stock 2,000 Retained Earnings 900 Service Revenue 75,800 Customers pay cash when they receive services. This is the cost of stylist wages through December 30. This is the cost of utilities through December 15. Salaries and Wages Expense 29,100 Utilities Expense 12,200 This year's rent was $2,000 per month. Rent Expense 20,000 This is the cost of supplies used through November 30. Supplies Expense 4,800 Income Tax Expense The company has an average tax rate of 30%. $80,200 $80,200 Totals