E4-15 Recording Adjusting Entries amd Preparing am Adjusted Trial Balance

North Star prepared the following unadjusted trail balance at the end of its second year of operation ending December 31, 2012

Other data not yet record at December 31, 2012

a) Rent expired during 2012, $1,200

b) Depreciation expense for 2012, $1,000

c) Utilities payable, $9,000

d) Income tax expense, $390

Required:

1. Using the format show in the demonstrate case, indicate the accounting equation effects of each requirement adjustment.

2. Prepare the adjusting journal entries require at December 31,2012

3. Summarize the adjusting journal in T-accounts. After entering the beginning balances and computing the adjusted ending balances, prepare an adjust trail balance as of December 31,2012

4. Compute the amount of net income using (a) the preliminary (unadjusted) numbers, and (b) the final (adjusted) numbers. Has the adjusting entries not been recorded, Would net income have been overstated or understate, and be what amount?

Account Titles Cash Accounts Receivable Prepaid Rent Equipment Accumulated Debit $12,000 6,000 2,400 21,000 Credit Depreciation-Equipment Accounts Payable Income Tax Payable Common Stock Retained Earnings Sales Revenue Salaries and Wages Expense Utilities Expense Rent Expense Depreciation Expense Income Tax Expense $ 1,000 1,000 0 24,800 2,100 50,000 25,000 12,500 0 Totals $78,900 $78,900