Vals Hair Emporium operates a hair salon. Its unadjusted trial balance as of December 31, 2015 follows along with information about selected accounts.

Account Names	Debit			Credit			Further Information
Cash	$	3,400						As reported on December 31 bank statement.
Supplies		3,900						Based on count, only $1,100 of supplies still exist.
Prepaid Rent		4,800						This amount was paid November 1 for rent through the end of January.
Accounts Payable				$	1,300			This represents the total amount of bills received for supplies and utilities through December 15. Val estimates that the company has received $410 of utility services through December 31 for which it has not yet been billed.
Salaries and Wages Payable					0			Stylists have not yet been paid $100 for their work on December 31.
Income Tax Payable					0			The company has paid last years income taxes but not this years taxes.
Common Stock					1,600			This amount was contributed for common stock company in prior years.
Retained Earnings					700			This is the balance reported at the end of last year.
Service Revenue					69,400			Customers pay cash when they receive services.
Salaries and Wages Expense		28,700						This is the cost of stylist wages through December 30.
Utilities Expense		11,800						This is the cost of utilities through December 15.
Rent Expense		16,000						This years rent was $1,600 per month.
Supplies Expense		4,400						This is the cost of supplies used through November 30.
Income Tax Expense		0						The company has an average tax rate of 30%.
Totals	$	73,000		$	73,000

PA4-4 Part 1

Required:

1.	Prepare the (preliminary) unadjusted net income statement for the year ended December 31, 2015.

VALS HAIR EMPORIUM
Unadjusted Income Statement (Preliminary)

PA4-4 Part 2

2.	Name the five pairs of balance sheet and income statement accounts that require adjustment and indicate the amount of adjustment for each pair.

Adj.	Balance Sheet Account	Related Income Statement Account	Amount
(1)
(2)
(3)
(4)
(5)

PA4-4 Part 3

3.

Prepare the adjusting journal entries that are required at December 31, 2015. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. Record the adjusting entry for supplies.

2. Record the adjusting entry for rent.

3. Record the adjusting entry for utilities expense.

4. Record the adjusting entry for wages.

5. Record the adjusting entry for income tax.

4-a.

Prepare the adjusted net income that the company should report for the year ended December 31, 2015.

VALS HAIR EMPORIUM
Income Statement

4-b.

By how much did the adjustments in requirement (3) cause net income to increase or decrease?

Net income

by