North Star prepared the following unadjusted trial balance at the end of its second year of operations ending December 31.

North Star prepared the following unadjusted trial balance at the end of its second year of operations ending December 31.

Account Titles	Debit			Credit
Cash	$	11,100
Accounts Receivable		5,100
Prepaid Rent		2,220
Equipment		20,100
Accumulated Depreciation—Equipment				$	1,190
Accounts Payable					1,190
Income Tax Payable					0
Common Stock					23,900
Retained Earnings					1,200
Sales Revenue					46,740
Salaries and Wages Expense		24,100
Utilities Expense		11,600
Rent Expense		0
Depreciation Expense		0
Income Tax Expense		0
Totals	$	74,220		$	74,220

Other data not yet recorded at December 31:

a.	Rent expired during the year, $1,110.
b.	Depreciation expense for the year, $1,190.
c.	Utilities owing, $8,100.
d.	Income tax expense, $300.

Indicate the accounting equation effects of each required adjustment. (Enter any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign.) Prepare the adjusting journal entries required at December 31. Summarize the adjusting journal entries in T-accounts. After entering the beginning balances and computing the adjusted ending balances, prepare an adjusted trial balance as of December 31. Compute the amount of net income using (a) the preliminary (unadjusted) numbers, and (b) the final (adjusted) numbers. Explanation: 4-a. (I) Preliminary Net Income = $46,740 − 24,100 − 11,600 = $11,040 (II) Adjusted Net Income = $46,740 − 24,100 − 19,700 − 1,110 − 1,190 − 300 = $340 4-b. Without adjustments, preliminary net income would have been overstated by $10,700.