4-a.	Calculate the adjusted net income that the company should report for the year ended December 31, 2015.

CP4-4 Identifying and Preparing Adjusting Journal Entries [LO 4-1, LO 4-2, LO 4-3, LO 4-6]

[The following information applies to the questions displayed below.]

Golf Academy, Inc., provides private golf lessons. Its unadjusted trial balance at December 31, 2015, follows, along with information about selected accounts.

Account Names

Debit

Credit

Further Information

Cash

$

32,300

As reported on December 31 bank statement.

Supplies

680

Based on count, only $240 of supplies still exist.

Unearned Revenue

$

2,300

Of this amount, $2,000 was received for December lessons and

$300 for January lessons.

Salaries and Wages payable

0

Employees were paid $1,400 for 10 days of work through December 28.

They have not yet been paid for work on December 29 and 30.

Income Tax Payable

0

The company has paid last years income tax but not this years tax.

Interest Payable

0

The company has not paid the $120 of interest owed on its note

payable for the current period.

Note Payable (long-term)

14,400

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.

Retained Earnings

3,400

This is the balance reported at the end of last year.

Service Revenue

51,180

Most customers pay cash for lessons each time they are provided,

but some customers pay in advance.

Salaries and Wages Expense

36,500

Employees worked through December 30, but did not work on

December 31.

Supplies Expense

2,800

This is the cost of supplies used through November 30.

Interest Expense

0

The company has not paid the $120 of interest owed on its note

payable for the current period.

Income Tax Expense

0

The company has an average tax rate of 20%.

Totals

$

72,280

$

72,280

Required:

1.	Prepare the (preliminary) unadjusted net income statement for the year ended December 31, 2015.

CP4-4 Part 2

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

References