A company had calculated net income to be $77,550 based on the unadjusted trial balance. The following adjusting journal entries were then made: Salaries payable of $790 was recorded; Interest earned but not received from investments $750; Prepaid insurance decreased by $550 for insurance used up during the period; $750 of unearned revenue that has now been earned. After recording these adjustments, net income would be:

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The adjustments affect net income as follows: Salaries payable decreases net income by $790, interest earned increases net income by $750, insurance expense decreases net income by $550, and earned revenue increases net income by $750. The net effect is an increase of $160, making the adjusted net income $77,710.

A Company Had Calculated Net Income to Be $77,550 Based