Problem 5.4A (Algo) Preparing a worksheet and financial statements, journalizing adjusting entries, and posting to ledger accounts. LO 5-2,5-3,5-4, 5-5 Shayla Green owns Creative Designs. The trial balance of the firm for January 31, 20x1, the first month of operations, is shown below. End-of-the-month adjustments must account for the following items: a. Supplies were purchased on January 1, 20xt; inventory of supplies on January 31, 20x1, is $800. b. The prepaid advertising contract was signed on January 1, 20x1, and covers a four-month period, c. Rent of $1,300 expired during the month d. Depreciation is computed using the straight-line method. The equipment has an estimated useful life of 10 years with no salvage value Required: 1. Complete the worksheet for the month. 2. Prepare an income statement, statement of owner's equity, and balance sheet. No additional investments were made by the owner during the month 3. Journalize and post the adjusting entries. Analyze If the adjusting entries had not been made for the month, by what amount would net income be overstated or understated? 20X1 Income Statement Debit Credit Balance Sheet Debit Credit Adjusted Trial Balance Debit Credit 34,900 12,000 800 $ 34,900 12,000 800 40,800 40,800 14,950 59,400 14,950 59,400 6,400 6,400 58,100 58,100 + 9,100 9,100 1.100 105,100 $ 1,100 10,200 $ 132,450 $ 58,100 $ 94,900 $ 74,350 $ 10,200 $ 58,100 $ 94,900 $ 74,350 Prepare a balance sheet. CREATIVE DESIGNS Balance Sheet January 31, 20X1 Assets + 0 $ 0 Total assets Liabilities and Owner's Equity Liabilities Owner's Equity Total Liabilities and Owner's Equity $ 0 Journal entry worksheet Prepare the adjusting entry for supplies. Note: Enter debits before credits. General Journal Debit Credit Date Jan. 31, 20X1 Record entry Clear entry View general journal *** Post the adjusting entries Account No.121 Credit Balance Dobit Supplies Date Jan. 1. 20X1 Jan 31, 20X1 Account No. 130 Credit Balance Prepaid Advertising Date Debit Jan. 01, 20X1 Jan. 31. 20X1 Account No.131 Credit Balance Prepaid Ront Date Debit Jan 1, 20X1 Jan 31, 20X1 Accumulated Depreciation Equipment Date Dabit Jan 31, 20X1 Account No: 142 Credit Balance Supplies Exponse Dato Debit Jan 31, 20X1 Account No.517 Credit Balance Advertising Expense Dato Debit Jan 31, 20X1 Account No. 519 Credit Balance Rent Expense Date Debit Jan 31, 20X1 Account No. 520 Credit Balance Depreciation Expense-Equipment Dato Debit Jan 31, 20X1 Account No. 523 Credit Balance 1. Complete the worksheet for the month. 2. Prepare an income statement, statement of owner's equity, and balance sheet. No additional investments were made by the owner during the month 3. Journalize and post the adjusting entries. Analyze If the adjusting entries had not been made for the month, by what amount would net Income be overstated or understated? Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Inc Stmt Reg 2 Stmt of OE Reg 2 Bal Sheet Reg 3 Gen Joumal Reg 3 Ledgers Analyze If the adjusting entries had not been made for the month, by what amount would net income be overstated or understated? Net income Amount