In the first column of the schedule presented below are the condensed financial statements for Melvin Motorvehicle Rentals before adjusting entries were made. The following items were not reflected in the statements:

1. Rental revenue earned but not collected or recorded, $1500.

2. Depreciation on vehicles not recorded, $14 500.

3. Wages earned by employees but not paid at year-end, $5600.

4. The company requires the first-day rental in advance as a deposit for making a reservation. The deposit is either deducted from the total rental charges or is forfeited. During the last week of June, deposits earned were not recorded as revenue, $990.

	MELVIN MOTORVEHICLE RENTALS Financial Statements
		Unadjusted balances			Adjustment		Adjusted balances
	Income statement Rental revenue Expenses: Depreciation expense Insurance expense Wages expense General expenses	$	255 600  —  46 800  140 000     24 000
	Profit	$	44 800
	Statement of changes in equity Beginning capital Add: Profit Less: Drawings	$	90 000  44 800    (72 000)
	Ending capital	$	62 800
	Balance sheet Cash at bank Accounts receivable Other receivables Vehicles Less: Accumulated depreciation	$	46 800  —  10 800  124 000    (38 000)
		$	143 600
	Wages payable Unearned rental revenue Loan payable Melvin Maserati, Capital	$	—  7 200  73 600     62 800
		$	143 600

Required

A. Prepare the necessary adjusting entries in general journal form.

B. Determine the effects of the adjustments on the financial statements by completing the schedule presented.

C 1. Did profit increase or decrease? By how much?

2. What was the effect of the adjusting entries on total assets? total liabilities? total equity?