Calculate the adjusted net income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Calculate the adjusted net income
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### Required Information
**Context:**
Val’s Hair Emporium operates a hair salon. Below is the unadjusted trial balance as of December 31, 2021, with additional information regarding selected accounts.
**Unadjusted Trial Balance:**
| **Account Names** | **Debit** | **Credit** | **Further Information** |
|---------------------------------|------------|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Cash | $4,700 | | As reported on December 31 bank statement. |
| Supplies | 5,200 | | Based on count, only $1,750 of supplies still exist. |
| Prepaid Rent | 8,700 | | This amount was paid November 1 for rent through the end of January. |
| Accounts Payable | | $1,950 | This represents the total amount of bills received for supplies and utilities through December 15. Val estimates that the company has received $540 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 year’s income taxes but not this year’s taxes. |
| Common Stock | 2,900 | | 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 | | 90,650 | Customers pay cash when they receive services. |
| Salaries and Wages Expense | 30,000 | | This is the cost of stylist wages through December 30. |
| Utilities Expense | 13,100 | | This is the cost of utilities through December 15. |
| Rent Expense | 29,000 | | This year’s rent was $2,900 per month. |
| Supplies Expense | 5,700 | | This is the cost of supplies used through November 30. |
| Income Tax Expense | 0 |"
Transcribed Image Text:---
### Required Information
**Context:**
Val’s Hair Emporium operates a hair salon. Below is the unadjusted trial balance as of December 31, 2021, with additional information regarding selected accounts.
**Unadjusted Trial Balance:**
| **Account Names** | **Debit** | **Credit** | **Further Information** |
|---------------------------------|------------|-------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Cash | $4,700 | | As reported on December 31 bank statement. |
| Supplies | 5,200 | | Based on count, only $1,750 of supplies still exist. |
| Prepaid Rent | 8,700 | | This amount was paid November 1 for rent through the end of January. |
| Accounts Payable | | $1,950 | This represents the total amount of bills received for supplies and utilities through December 15. Val estimates that the company has received $540 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 year’s income taxes but not this year’s taxes. |
| Common Stock | 2,900 | | 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 | | 90,650 | Customers pay cash when they receive services. |
| Salaries and Wages Expense | 30,000 | | This is the cost of stylist wages through December 30. |
| Utilities Expense | 13,100 | | This is the cost of utilities through December 15. |
| Rent Expense | 29,000 | | This year’s rent was $2,900 per month. |
| Supplies Expense | 5,700 | | This is the cost of supplies used through November 30. |
| Income Tax Expense | 0 |

Transcribed Image Text:**Educational Website Transcription:**
### Income Statement Exercise
**Instructions:**
**4-a.** Calculate the adjusted net income that the company should report for the year ended December 31, 2021.
**4-b.** By what dollar amount did the adjustments in requirement (3) cause net income to increase or decrease?
**Interactive Tabs:**
- **Req 4A**
- **Req 4B**
**Income Statement for Val's Hair Emporium**
- The table is structured to allow for input of financial figures. Each row likely represents a specific category of income or expense, essential for calculating net income.
- Two key totals marked as zero are present, suggesting initial sums to be adjusted with appropriate data.
**Graph/Diagram Explanation:**
There is no graph or diagram present in the image. The table for input has blue headers and fields designated for entering financial data, providing a clear interface for organizing the information needed to calculate net income adjustments.
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