Following are two income statements for Kendall Co. for the year ended December 31. The left column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts. Analyze the statements and prepare the eight adjusting entries that likely were recorded. (Note: 30% of the $6,000 adjustment for Fees Earned has been earned but not billed, and the other 70% has been earned by performing services that were paid for in advance.)
KENDALL CO. Income Statements For Year Ended December 31 | |||
| Unadjusted | Adjusted | |
Revenues |
|
| |
Fees earned | $24,000 | $30,000 | |
Commissions earned . | 42,500 | 42,500 | |
Total revenues | 66,500 | 72,500 | |
Expenses |
|
| |
Depreciation expense—Computers | 0 | 1,500 | |
Depreciation expense—Office furniture | 0 | 1,750 | |
Salaries expense | 12,500 | 14,950 | |
Insurance expense | 0 | 1,300 | |
Rent expense | 4,500 | 4,500 | |
Office supplies expense | 0 | 480 | |
Advertising expense | 3,000 | 3,000 | |
Utilities expense | 1,250 | 1,320 | |
Total expenses | 21,250 | 28,800 | |
Net income | $45,250 | $43,700 | |
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