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. KENDALL CO. Income Statements For Year Ended December 31 Unadjusted Adjusted Revenues Fees earned $ 24,000 $ 31,200 Commissions earned 42,500 42,500 Total revenues 66,500 73,700 Expenses Depreciation expense—Computers 0 1,800 Depreciation expense—Office furniture 0 2,100 Salaries expense 12,500 15,440 Insurance expense 0 1,560 Rent expense 4,500 4,500 Office supplies expense 0 576 Advertising expense 3,000 3,000 Utilities expense 1,250 1,334 Total expenses 21,250 30,310 Net income $ 45,250 $ 43,390 Analyze the statements and prepare the eight adjusting entries that likely were recorded. (Note: 30% of the $7,200 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.)

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.

  

KENDALL CO. Income Statements For Year Ended December 31
	Unadjusted		Adjusted
Revenues
Fees earned	$	24,000	$	31,200
Commissions earned		42,500		42,500
Total revenues		66,500		73,700
Expenses
Depreciation expense—Computers		0		1,800
Depreciation expense—Office furniture		0		2,100
Salaries expense		12,500		15,440
Insurance expense		0		1,560
Rent expense		4,500		4,500
Office supplies expense		0		576
Advertising expense		3,000		3,000
Utilities expense		1,250		1,334
Total expenses		21,250		30,310
Net income	$	45,250	$	43,390

  

Analyze the statements and prepare the eight adjusting entries that likely were recorded. (Note: 30% of the $7,200 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% × $7,200) = $2,160        To record earned fees collected in advance.   Fees Earned = (70% × $7,200) = $5,040