A review of the ledger of Skysong, Inc. at December 31 produces the following data for the preparation of annual adjusting entries:

1.		Salaries and Wages Payable, $0. There are 9 salaried employees. 5 employees receive a salary of $1,360 each per week, and 4 employees earn $660 each per week. Employees do not work weekends. All employees worked two days after the last pay period and before December 31.
2.		Unearned Rent Revenue, $307,600. The company began leasing condos in its new building on November 1. Each tenant has to make a $4,840 security deposit that is not refundable until occupancy is ended. At December 31, the company had the following rental contracts that were paid in full for the entire term of the lease:

Date		Term (in months)		Monthly Rent		Number of Leases
Nov. 1		6		$3,800		4
Dec. 1		6		$10,140		3

3.

Prepaid Insurance, $15,300. This balance consists of payments on two policies. The terms of the policies are as follows:

Policy		Effective Date		Amount		Number of Months Coverage
A650		May 1		$6,900		12
B974		Oct. 1		8,400		24

4.

Notes Payable, $84,000. This balance consists of a one year, 8% note that is dated June 1.

Prepare the adjusting entries at December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.	Date	Account Titles and Explanation	Debit	Credit
1.	Dec. 31
2.	Dec. 31
3.	Dec. 31
4.	Dec. 31

List of Accounts

Skysong is preparing for a meeting with potential investors. What is the net effect of the adjusting entries on net income?

Net effect of adjusting entries is to Choose the answer from the menu in accordance to the question statement increasedecrease net income by $Enter your answer in accordance to the question statement