Vals Hair Emporium operates a hair salon. Its unadjusted trial balance as of December 31, 2021, follows, along with information about selected accounts. Account Names Debit Credit Further Information Cash $ 4,400 As reported on December 31 bank statement. Supplies 4,900 Based on count, only $1,600 of supplies still exist. Prepaid Rent 7,800 This amount was paid November 1 for rent through the end of January. Accounts Payable $ 1,800 This represents the total amount of bills received for supplies and utilities through December 15. Val estimates that the company has received $510 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 $150 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 2,600 This amount was contributed for common stock in prior years. Retained Earnings 900 This is the balance reported at the end of last year. Service Revenue 85,700 Customers pay cash when they receive services. Salaries and Wages Expense 29,700 This is the cost of stylist wages through December 30. Utilities Expense 12,800 This is the cost of utilities through December 15. Rent Expense 26,000 This years rent was $2,600 per month. Supplies Expense 5,400 This is the cost of supplies used through November 30. Income Tax Expense 0 The company has an average tax rate of 25%. Totals $ 91,000 $ 91,000 PA4-4 (Algo)

Part 1 Required:

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

2. Prepare the adjusting journal entries that are required at December 31, 2021. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

3.a. Calculate the adjusted net income that the company should report for the year ended December 31, 2021.

3.b. By what dollar amount did the adjustments in requirement (3) cause net income to increase or decrease?