Trotmans Variety Store is completing the accounting process for the current year just ended, December 31. The transactions during the year have been journalized and posted. The following data with respect to adjusting entries are available: Wages earned by employees during December, unpaid and unrecorded at December 31, amounted to $4,300. The last payroll was December 28; the next payroll will be January 6. Office supplies on hand at January 1 of the current year totaled $770. Office supplies purchased and debited to Office Supplies during the year amounted to $980. The year-end count showed $435 of supplies on hand. One-fourth of the basement space is rented to Kathys Specialty Shop for $720 per month, payable monthly. At the end of the current year, the rent for November and December had not been collected or recorded. Collection is expected in January of the next year. The store used delivery equipment all year that cost $76,500; $20,100 was the estimated annual depreciation. On July 1 of the current year, a two-year insurance premium amounting to $3,360 was paid in cash and debited in full to Prepaid Insurance. Coverage began on July 1 of the current year. The remaining basement of the store is rented for $1,920 per month to another merchant, M. Carlos, Inc. Carlos sells compatible, but not competitive, merchandise. On November 1 of the current year, the store collected six months rent in the amount of $11,520 in advance from Carlos; it was credited in full to Unearned Rent Revenue when collected. Trotmans Variety Store operates a repair shop to meet its own needs. The shop also does repairs for M. Carlos. At the end of the current year, Carlos had not paid $1,120 for completed repairs. This amount has not yet been recorded as Repair Shop Revenue. Collection is expected during January of next year.

On December 31, Fawzi Company prepared an income statement and balance sheet and failed to take into account four adjusting entries. The income statement, prepared on this incorrect basis, reflected pretax income of $63,000. The balance sheet (before the effect of income taxes) reflected total assets, $167,000; total liabilities, $78,000; and stockholders' equity, $89,000. The data for the four adjusting entries follow: Required: Complete the following tabulation to correct the financial statements for the effects of the four errors. (Amounts to be deducted should be indicated with a minus sign.) b. a. Wages amounting to $39,000 for the last three days of December were not paid and not recorded (the next payroll will be at the beginning of next year). b. Depreciation of $16,000 for the year on equipment that cost $167,000 was not recorded. c. Rent revenue of $9,300 was collected on December 1 f the current year for office space for the period December 1 to February 28 of the next year. The $9,300 was credited in full to Unearned Rent Revenue when collected. d. Income taxes were not recorded. The income tax rate for the company is 30 percent. C. Items Balances reported Additional adjustments: Wages Depreciation Rent revenue Adjusted balances d. Income taxes Correct balances Net Income Total Assets $ 63,000 Total Liabilities 63,000 $ 167,000 $ 78,000 $ 167,000 $ 63,000 $ 167,000 $ Stockholders' Equity 78,000 78,000 $ 89,000 89,000 89,000