Magic Cleaning Services has a fiscal year end of December 31st. It is in its first year of operations. As of December 31, Magic has the following unadjusted trial balance:

Account Debit Credit

Cash   $ 430,900 

Accounts Receivable $158,000 

Supplies $111,000 

Equipment $120,000

Accounts Payable  $ 45,900

Unearned Service Revenue  $ 113,600

Common Stock  $ 100,000

Retained Earnings  -0-

Service Revenue  $ 649,200

Wage Expense $ 48,600 

Rent Expense $ 18,000 

Utilities Expense $ 6,200

Administrative Expense $ 16,000  ________

TOTALS $ 908,700 $ 908,700

In addition, Magic has not yet adjusted for the following:

1. The equipment was purchased on March 1 of the current year. It has a 10-year life, 10% salvage value and Magic uses the double declining balance method for depreciation. Magic records depreciation to the nearest full month.

2. On March 1, Magic prepaid $18,000 for 12 months of rent on an office/warehouse. The original entry was recorded as Rent Expense.

3. By December 31st, 60% of the services related to the Unearned Revenues had been performed. 

4. Wages of $5,700 should be accrued and are scheduled to be paid on January 2. 

5. Supplies of $33,000 were still on hand at year end.

6. Based on industry averages, it is estimated that 3% of the accounts receivable will prove to be uncollectible.

Required:

 To record AJE #2, Magic should do which of the following to record the correct adjustment:

-credit Prepaid Rent for $3,000

-debit Rent Expense for $15,000

-Debit Prepaid Rent for $15,000

-credit Rent Expense for $3,000

Using the information presented above for Magic Cleaning Services, determine Net Income AFTER all adjustments have been recorded:  $_____________________________

(*Note:  When recording your answer, do not use a dollar sign or comma.  Example: If your answer is $452,000, enter your answer as 452000.)