4 Information Available for Adjusting Entries 1 $12,000 of wages earned since the December 24th payroll have not yet been paid or recorded. They will be paid in 2021. 2 $6,000 of the unearned revenue has now been earned. 3 Bad debt expense is recorded at 3% of sales revenue. 4 Interest has not yet been recorded on the notes payable which was issued on February 1, 2020 with a 4% annual interest rate. The note has a three-year term and principal and interest are due on the maturity date in 2023. 5 A physical count of supplies revealed that $8,000 of supplies were remaining as of December 31, 2020. 6 Equipment was purchased on January 1, 2018 and management has determined a useful life of 10 years and a $10,000 salvage value. Record current year depreciation expense. 7 $36,000 was recorded to prepaid rent on January 1, 2020 to cover 2 years . 8 Income tax expense of $34,390 is due in 2021. ADJUSTMENTS ADJUSTED TB INCOME STATEMENT BALANCE SHEET Debit Credit Debit Credit Debit Credit $ UNADJUSTED TB December 31, 2020 Dobili Credit 90,000 25,000 45,000 S 1,000 22,000 35,000 36,000 217,000 110,000 20,000 30,000 27,000 15,000 December 31, 2020 Debit Credit 90,000 25.000 45.000 1,000 22.000 35,000 38 000 217.000 110,00D 20,000 30.000 27.000 15,000 Cash Short-term investments Accounts receivable, net Allowance for doubtful accounts Supplies Inventory Prepaid rent Land Equipment Accumulated depreciation Trademark Accounts payable Wages payable Interest payable Income tax payable Unearned revenue Long-term notes payable - due 02.01.23 Correron slock Retained earnings Dividends Sales revenue, net Cost of goods sold Wages expense Rent expense Bad debt expense Supples expense Depreciation expense Interest expense Interest revenue Income tax expense TOTALS 12,000 50,000 75,000 200,000 12.000 50,000 75,000 200,000 50,000 50,000 657,000 657,000 307,000 80,000 307.000 80,000 15,000 15.000 Page 1 1,082.08 $ 1.052.000 S 1,062.000 1,062.000 1.062.000 NET INCOME