On December 31, 2019, Krug Company prepared adjusting entries that included the following items:

Depreciation expense: $32,000.

Accrued sales revenue: $30,000.

Accrued expenses: $11,000.

Used insurance: $4,000; the insurance was initially recorded as prepaid.

Rent revenue earned: $2,000; the rent was initially prepaid by the tenant and credited to unearned rent revenue.

If Krug Company reported pretax income of $240,000 prior to the adjusting entries, how much is Krug's pretax income after the adjusting entries?

Multiple Choice

• $225,000.

• $229,000.

• $255,000.

• $227,000.