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, 20X1; inventory of supplies on January 31, 20X1, is $600. b. The prepaid advertising contract was signed on January 1, 20X1, and covers a four-month period. c. Rent of $1,100 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2 Inc Stmt Req 2 Stmt of OE Req 2 Bal Sheet Req 3 Gen Journal Req 3 Ledgers Analyze Complete the worksheet for the month. CREATIVE DESIGNS Worksheet Income Statement Balance Sheet Credit Debit Credit Debit Credit Month Ended January 31, 20X1 Trial Balance Adjustments Adjusted Trial Balance Account Name Debit Credit Debit Credit Debit Cash Accounts receivable Supplies Prepaid advertising Prepaid rent Equipment $ 34,500 11,600 5,750 4,400 13,200 45,600 Accumulated depreciation-Equipment Accounts payable Shayla Green, Capital Shayla Green, Drawing Fees income Advertising expense Depreciation expense-Equipment Rent expense Salaries expense Supplies expense Utilities expense Sub-totals Totals 14,550 59,000 6,000 57,100 8,700 900 $ 130,650 $ 130,650 Req 1 Req 2 Inc Stmt Req 2 Stmt of OE Req 2 Bal Sheet Req 3 Gen Journal Req 3 Ledgers Analyze Prepare an income statement. CREATIVE DESIGNS Income Statement Month Ended January 31, 20X1 Revenue Expenses Total expenses Req 2 Inc Req 1 Stmt Req 2 Stmt of OE Req 2 Bal Sheet Req 3 Gen Journal Req 3 Ledgers Analyze Prepare a statement of owner's equity. No additional investments were made by the owner during the month. CREATIVE DESIGNS Statement of Owner's Equity Month Ended January 31, 20X1 Req 1 Req 2 Inc Stmt Req 2 Stmt of OE Req 2 Bal Sheet Req 3 Gen Journal Req 3 Ledgers Analyze Prepare a balance sheet. CREATIVE DESIGNS Total assets Balance Sheet January 31, 20X1 Assets Liabilities and Owner's Equity Liabilities Owner's Equity Total Liabilities and Owner's Equity Req 1 Req 2 Inc Stmt Req 2 Stmt of OE Req 2 Bal Sheet Req 3 Gen Journal Req 3 Ledgers Analyze Journalize the adjusting entries. View transaction list Journal entry worksheet 1 2 3 4 Prepare the adjusting entry for supplies. Note: Enter debits before credits. Date Jan. 31, 20X1 General Journal Debit Credit Record entry Clear entry View general journal > Journalize the adjusting entries. View transaction list 1 Prepare the adjusting entry for supplies. 2 Prepare the adjusting entry for advertising. 3 Prepare the adjusting entry for rent. 4 Prepare the adjusting entry for depreciation. Credit Note: journal entry has been entered Record entry 7 Clear entry View general journal Req 1 Req 2 Inc Stmt Req 2 Stmt of OE Req 2 Bal Sheet Req 3 Gen Journal Req 3 Ledgers Analyze Post the adjusting entries. Supplies Date Jan. 1, 20X1 Jan. 31, 20X1 Prepaid Rent Date Jan. 1, 20X1 Jan. 31, 20X1 Prepaid Advertising Account No.121 Debit Credit Balance Date Jan. 01, 20X1 Jan. 31, 20X1 Account No.131 Debit Credit Balance Supplies Expense Date Jan. 31, 20X1 Date Rent Expense Jan. 31, 20X1 Debit Credit Account No. 130 Balance Account No. 142 Debit Credit Balance Accumulated Depreciation-Equipment Date Jan. 31, 20X1 Account No.517 Advertising Expense Account No. 519 Debit Credit Balance Date Debit Credit Balance Jan. 31, 20X1 Account No. 523 Debit Credit Balance Account No. 520 Debit Credit Balance Depreciation Expense-Equipment Date Jan. 31, 20X1 Req 1 Req 2 Inc Stmt Req 2 Stmt of OE Req 2 Bal Sheet Req 3 Gen Journal Req 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