Exercise 3-5 Analyzing and preparing adjusting entries LO P1, P3 Following are two income statements for Alexis Co. for the year ended December 31. The Jeft number column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts. The middle column shows a blank space for each income statement effect of the eight adjusting entries a through g (the balance sheet part of the entries is not shown here). ALEXIS CO. Income Statements For Year Ended December 31 Unadjusted Adjustments Adjusted Revenues Fees earned $24,000 a. $31, 200 Commissions earned 42,500 42,500 Total revenues $66, 500 73, 700 Expenses Depreciation expense-Computers 0 b. 1, 800 Depreciation expense-Office furniture 0 C. 2, 100 Salaries expense 12,500 d. 15, 440 Insurance expense e. 1,560 Rent expense 4,500 4,500 office supplies expense f. 576 Advertising expense 3,000 3,000 utilities expense 1,250 g. 1, 334 Total expenses 21, 250 30, 310 Net income $45,250 $43, 390 Check my a. $24,000 42,500 $66,500 $31,200 42,500 73,700 Fees earned Commissions earned Total revenues Expenses Depreciation expense-Computers Depreciation expense-office furniture Salaries expense Insurance expense Rent expense office supplies expense Advertising expense Utilities expense Total expenses Net income 0 12,500 4,500 b. C. d. e. f. 1,800 2,100 15, 440 1,560 4,500 576 3,500 1, 334 30, 310 $43, 390 9 3,000 1,250 21, 250 $45, 250 Analyze the statements and prepare the eight adjusting entries a through g that likely were recorded. Note: Answer for a has two entries 30% of (1) the $7,200 adjustment for Fees Earned has been earned but not billed, and (ii) the other 70% has been earned by performing services that were paid for in advance. View transaction list Journal entry worksheet Journal entry worksheet