Scenario: Herd Consulting is in the process of closing its books for the year ended December 31, 2020. The income portion of the General Ledger for the year ended December 31, 2020 is shown below; however, a number of adjustments need to be made, as described below. Make the necessary adjustments in order to determine the correct net income for the tax return. Potential Adjustments: A. The accountants found that a cash deposit for $70,000 for future work had been recorded as a sale, but the sale was not completed during the year. Back this transaction off the books. I B. Depreciation expense has been understated by $23,000. C. A contract was signed for a new marketing campaign and the ads have already been run. No invoice has been received for these ads, but the cost of $21,000 has already been accrued. D. An invoice from an Outside Consulting firm in the amount of $60,000 was received and paid. This was erroneously booked as an expense. The work has not been started. It should have been booked as a prepaid item. Correct it. E. The last payroll for the year covered the period through 12/31/2020 and was paid on 12/31/2020. The amount of gross payroll was $22,000. It is not yet on the books. F. The allowance for doubtful accounts needs to be increased by $20,000 for 2020. Required: a. Show the full adjusting journal entry for each lettered item if an adjustment is required. b. Post the portion of the adjusting entry relating to the income statement in the columns below to derive the proper net income for 2020. c. Use the next sheet to record your answers. Adjusting Entries AJES DR. CR. Income Statement Tax Return DR. CR. Sales Payroll Expense Outside Consulting Expense Marketing Expense Bad Debt Expense Depreciation Books General Ledger DR. CR. $3,480,000 $1,782,000 1,049,000 98,000 112,000 Net Income for 2020 Journal Debit Credit Description Sales