Preparing Adjusting Journal Entries and Trial Balance

Discovery Inc., an electronics retailer, commenced operations on January 1, 2020. The unadjusted trial balance for Discovery as of March 31, 2020, follows.

Unadjusted Trial Balance
Acct. No.	Accounts	Debit	Credit
100	Cash	$104,000	$
104	Accounts receivable	98,000
105	Supplies	9,000
106	Inventory	150,000
108	Prepaid insurance	6,000
155	Building	300,000
160	Equipment	160,000
202	Accounts payable		90,000
208	Deferred service revenue		3,600
240	Note payable		250,000
302	Common Stock		220,000
300	Retained earnings		176,400
310	Dividends	3,000
400	Sales		700,000
510	Cost of goods sold	400,000
515	Operating expenses	30,000
520	Salaries expenses	180,000
	Totals	$1,440,000	$1,440,000

Additional information

1. Examination of supplies indicates that $6,000 of supplies are still available on March 31, 2020.
2. One year of insurance coverage was purchased on January 1, 2020, for $6,000 cash.
3. The building and equipment (purchased on January 1, 2020) will be depreciated evenly over the useful lives of 30 years and 8 years, respectively.
4. $1,600 of the $3,600 in Deferred Service Revenue relates to service obligations to be performed after March 31, 2020.
5. Annual interest on the note payable is 8%. Interest is due in one year upon the maturity of the note. The note was issued on January 1, 2020.
6. Utilities for March 2020 of $1,600 have been incurred but not yet paid.
7. At the end of March, the company provided a new service to customers for in-home assessments. The company will bill customers $1,200 in April for services performed in March.
8. Additional general ledger accounts, currently with a zero balance, are:

170	Accumulated Depreciation--Building	516	Supplies Expense
171	Accumulated Depreciation--Equipment	517	Insurance Expense
203	Utilities Payable	518	Depreciation Expense
209	Interest Payable	519	Utilities Expense
403	Service Revenue	530	Interest Expense

a. Prepare all necessary adjusting entries as of March 31 for the three-month period ended March 31, 2020.

b. Prepare an adjusted trial balance on March 31, 2020.

c. Compute net income for the three months ended March 31, 2020.