On December 31, 2003, the bookkeeper for Joseph Company prepared the following income statement and balance sheet summarized here but neglected to consider three adjusting entries.

Data on the three adjusting entries follow:

a. Depreciation of $5,000 on the equipment for 2003 was not recorded.

b. Rent revenue of $2,000 earned for December 2003 was neither collected nor recorded.

c. Income tax expense of $6,900 for 2003 was neither paid nor recorded.
Required: 1. Prepare the three adjusting entries that were omitted. Use the account titles shown in the income statement and balance sheet data. 2. Complete the two columns to the right in the preceding tabulation to show the correct amounts on the income statement and balance sheet.

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As Prepared Effects of Adjusting Entries Corrected Amounts Income Statement Revenues $98,000 Expenses (72.000) Income tax expense Net income $26,000 Balance Sheet Assets Cash $20,000 Accounts receivable 22.000 Rent receivable Equipment 50,000 Accumulated depreciation (10,000) $82,000 Liabilities Accounts payable $10,000 Income taxes payable Stockholders' Equity Contributed capital Retained earnings 40,000 32,000 $82.000