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, 201; inventory of supplies on January 31, 20X1, is $1,450. b. The prepaid advertising contract was signed on January 1, 20X1, and covers a four-month period. c. Rent of $1,950 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 the worksheet for the month. Account Name Cash Accounts receivable Supplies Prepaid advertising Prepaid rent Equipment 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 Net income Totals CREATIVE DESIGNS Worksheet Month Ended January 31, 20X1 Adjusted Trial Balance Trial Balance Adjustments Debit Credit Debit Credit $ 36,200 13,300 9,150 11,200 23,400 30,000 16,250 60,700 7,700 66,150 10,400 Debit Income Statement Balance Sheet Credit Debit Credit Debit Credit $ 36,200 13,300 7,700 1,450 2,800 8,400 1,950 21,450 30,000 250 250 16,250 60,700 7,700 66,150 2,800 250 1,950 10,400 7,700 1,750 $ 0 $ 12,700 $ 143,350 $ 143,350 $ 0 $ 12,700 $ 143,350 $ 143,350 1,750 $ 143,100 $ 143,100 $ 0 $ 0 $ 0 $ 0 Cash CREATIVE DESIGNS Balance Sheet January 31, 20X1 Assets Accounts receivable Supplies Prepaid advertising Prepaid rent Equipment Less: Accumulated depreciation-Equipment Total assets Liabilities and Owner's Equity Liabilities Accounts payable Owner's Equity Shayla Green, Capital Total Liabilities and Owner's Equity $ 36,200 13,300 1,450 8,400 21,450 $ 30,000 (250) 29,750 $ 110,550 $ 49,850 x $ 60,700 x $ 110,550 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. 130 Debit Credit Balance Accumulated Depreciation Account No.131 Equipment Debit Credit Balance Date Jan. 31, 20X1 Supplies Expense Date Jan. 31, 20X1 Rent Expense Date Jan. 31, 20X1 Account No. 142 Debit Credit Balance 250 X (250) Account No.517 Advertising Expense Account No. 519 Debit Credit Balance Date Jan. 31, 20X1 Debit Credit Balance Account No. 523 Debit Credit Balance Account No. 520 Depreciation ExpenseEquipment Debit Credit Balance Date Jan. 31, 20X1 If the adjusting entries had not been made for the month, by what amount would net income be overstated or understated? Net income Amount