Reference no: EM132619704

On December 31, 2014, Krug Company reported pretax income of $210,000 prior to the following adjusting entries:

Depreciation expense: $29,000;

Accrued service revenues: $27,000;

Accrued expenses: $19,000;

Used insurance: $7,000; the insurance was initially recorded as prepaid.

Rent revenue earned: $5,000; the rent was initially prepaid by the tenant and credited to unearned rent revenue.

Problem 1: How much is Krug's pretax income after adjusting entries?

Option 1: $211,000.

Option 2: $187,000.

Option 3: $189,000.

Option 4: $194,000.