E4-17 Analyzing the Effects of Adjusting Entries on the Income Statement and Balance Sheet L04-1, 4-2 On December 31, Fawzi Company prepared an income statement and balance sheet and failed to take into account four adjusting entries. The income statement, prepared on this incorrect basis, reflected pretax income of $65,000. The balance sheet (before the effect of income taxes) reflected total assets, $164,000; total liabilities, $87,000; and stockholders' equity, $77,000. The data for the four adjusting entries follow: a. Wages amounting to $34,000 for the last three days of December were not paid and not recorded (the next payroll will be at the beginning of next year). b. Depreciation of $9,000 for the year on equipment that cost $164,000 was not recorded. c. Rent revenue of $6,900 was collected on December 1 of the current year for office space for the period December 1 to February 28 of the next year. The $6.900 was credited in full to Uneamed Rent Revenue when collected d. Income taxes were not recorded. The income tax rate for the company is 30 percent. Required: Complete the following tabulation to correct the financial statements for the effects of the four errors. (Amounts to be deducted should be indicated with a minus sign.) Items Net Income Total Assets Total Stockholders' Llabilities Equity 87,000 $ 77,000 65,000 S 164,000 Balances reported Additional adjustments: a Wages b. Depreciation c. Rent revenue Adjusted balances d. Income taxes Correct balances 65,000 164,000 87,000 77,000 65,000 S 164,000 S 87,000 77,000