Question 4 USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (5) QUESTIONS: 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 Cash Accounts Receivable Supplies Building Accounts Payable Unearned Service Revenue Common Stock Retained Earnings Service Revenue Wage Expense Rent Expense Utilities Expense Administrative Expense TOTALS Debit $430,900 $158,000 $ 90,000 $111,000 Credit $ 46,100 $ 108,000 $ 100,000 -0- $ 48,600 $ 12,600 $619,200 $ 6,200 $ 16,000 $ 873,300 $ 873,300 1 pts In addition, Magic has not yet adjusted for the following: 1. The building was purchased on March 1 of the current year. It has a 30-year life, 10% salvage value and Magic uses the straight-line method for depreciation. 2. On April 1, Magic prepaid $12,600 for 12 months of rent on a warehouse. The original entry was recorded as Rent Expense. 3. By December 31st, 40% of the of the services related to the Unearned Revenues had been performed. 4. Wages of $4,800 should be accrued and are scheduled to be paid on January 2. 5. Supplies of $75,000 were still on hand at year end. 6. Based on industry averages, it is estimated that 2.5% 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 $9,450 O debit Rent Expense for $3,150 Debit Prepaid Rent for $9,450 credit Rent Expense for $3,150