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USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION: Magic Cleaning Services has a fiscal year end of December 31st. It is in its first

USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT QUESTION:

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 Debit Credit
Cash $ 430,900
Accounts Receivable $158,000
Supplies $111,000
Equipment $120,000
Accounts Payable $ 45,900
Unearned Service Revenue $ 113,600
Common Stock $ 100,000
Retained Earnings -0-
Service Revenue $ 649,200
Wage Expense $ 48,600
Rent Expense $ 18,000
Utilities Expense $ 6,200
Administrative Expense $ 16,000 ___________
TOTALS $ 908,700 $ 908,700

In addition, Magic has not yet adjusted for the following:

1. The equipment was purchased on March 1 of the current year. It has a 10-year life, 10% salvage value and Magic uses the double declining balance method for depreciation. Magic records depreciation to the nearest full month.

2. On March 1, Magic prepaid $18,000 for 12 months of rent on an office/warehouse. The original entry was recorded as Rent Expense.

3. By December 31st, 60% of the services related to the Unearned Revenues had been performed.

4. Wages of $5,700 should be accrued and are scheduled to be paid on January 2.

5. Supplies of $33,000 were still on hand at year end.

6. Based on industry averages, it is estimated that 3% of the accounts receivable will prove to be uncollectible.

Required:

Part A

Using the information presented above for Magic Cleaning Services, determine Net Income AFTER all adjustments have been recorded: $_____________________________

(*Note: When recording your answer, do not use a dollar sign or comma. Example: If your answer is $452,000, enter your answer as 452000.)

Part B

Using the information presented for Magic Cleaning Services, IF noneof the (6) adjusting journal entries had been recorded, determine the effect on Total Assets.

ASSETS LIABILITIES EQUITY
[BLANK_A]

(*NOTE: When recording your answer, use O for Overstated, U for Understated, or NE for No Effect. Do not space between your O/U/NE and the dollar amount of the error. Example: If your answer for the effect on Assets is Understated by $10,500, enter your answer as U10500. Do not use dollar signs or commas when recording your answer.)

PART C *Note: Answer is OVERSTATED BY 62460, can't get A-B-D right though*

Using the information presented for Magic Cleaning Services, IF none of the (6) adjusting journal entries had been recorded, determine the effect on Total Liabilities.

ASSETS LIABILITIES EQUITY

O 62460

(*NOTE: When recording your answer, use O for Overstated, U for Understated, or NE for No Effect. Do not space between your O/U/NE and the dollar amount of the error. Example: If your answer for the effect on Assets is Understated by $10,500, enter your answer as U10500. Do not use dollar signs or commas when recording your answer.)

Part D

Using the information presented for Magic Cleaning Services, IF none of the (6) adjusting journal entries had been recorded, determine the effect on Total EQUITY.

ASSETS LIABILITIES EQUITY
[BLANK_C]

(*NOTE: When recording your answer, use O for Overstated, U for Understated, or NE for No Effect. Do not space between your O/U/NE and the dollar amount of the error. Example: If your answer for the effect on Assets is Understated by $10,500, enter your answer as U10500. Do not use dollar signs or commas when recording your answer.)

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