How do you calculate the Adjusted Net Income?

1. How do you calculate the Adjusted Net Income?

2. Had the adjusting entries not been recorded, would net income have been overstated or understated, and by what amount?

Net Income overstated by ___________________

[The following information applies to the questions displayed below.) North Star prepared the following unadjusted trial balance at the end of its second year of operations ending December 31. Credit Debit $ 12,900 6,900 2,580 21,900 Account Titles Cash Accounts Receivable Prepaid Rent Equipment Accumulated Depreciation Accounts Payable Income Tax Payable Common Stock Retained Earnings Sales Revenue Salaries and Wages Expense Utilities Expense Rent Expense Depreciation Expense Income Tax Expense Totals $ 1,090 1,090 0 25,700 3,000 52,700 25,900 13,400 0 0 $83,580 $83,580 Other data not yet recorded at December 31: a. Rent expired during the year, $1,290. b. Depreciation expense for the year, $1,090. c. Utilities used and unpaid, $9,900. d. Income tax expense, $480. 4. Compute the amount of net income using (a) the preliminary (unadjusted) numbers and (b) the final (adjusted) numbers. Had the adjusting entries not been recorded, would net income have been overstated or understated, and by what amount? Complete this question by entering your answers in the tabs below. Req 4A Req 4B Compute the amount of net income using (a) the preliminary (unadjusted) numbers, and (b) the final (adjusted) numbers. $ 13,400 (0) Preliminary Net Income (1) Adjusted Net Income