Question

A company had calculated net income to be $77,750 based on the unadjusted trial balance. The following adjusting entries were then made for: 1. Salaries and wages owed but not yet recorded or aid of $810 2. Interest earned but not recorded or received from investments of $770 3. Prepaid insurance premiums amounting to $570 have expired 4. Unearned revenue in the amount of $770 has now been earned. Required: Determine the amount of net income (loss) that will be reported after the adjustments are recorded.

Answer 1

The amount of net income (loss) that will be reported after the adjustments are recorded is $77,910

Step-by-step explanation:

The computation of the adjusted net income is shown below:

= Unadjusted net income balance - salaries unpaid + interest earned - expired prepaid insurance + unearned revenue

= $77,750 - $810 + $770 - $570 + $770

= $77,910

As it includes two expenses and two incomes so we adjust it accordingly as in the income statement, the total revenues and the total expenses are recorded.