Following are two income statements for Alexis 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.

Following are two income statements for Alexis 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.

ALEXIS CO. Income Statements For Year Ended December 31
	Unadjusted		Adjusted
Revenues
Fees earned	$	24,000	$	28,800
Commissions earned		42,500		42,500
Total revenues		66,500		71,300
Expenses
Depreciation expense—Computers		0		1,200
Depreciation expense—Office furniture		0		1,400
Salaries expense		12,500		14,460
Insurance expense		0		1,040
Rent expense		4,500		4,500
Office supplies expense		0		384
Advertising expense		3,000		3,000
Utilities expense		1,250		1,306
Total expenses		21,250		27,290
Net income	$	45,250	$	44,010

 

Analyze the statements and prepare the eight adjusting entries that likely were recorded. (Note: 30% of the $4,800 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.) Explanation: Dec. 31 To record earned but unbilled fees.   Fees earned = (30% × $4,800) = $1,440     Dec. 31 To record earned fees collected in advance.   Fees earned = (70% × $4,800) = $3,360