Reference no: EM132814213

On December 31, 2021, a company reported pretax income of $120,000 prior to recording the following adjusting entries for:

Depreciation expense: $31,000.

Accrued service revenues: $29,000.

Accrued expenses: $12,000.

Used insurance: $9,000; the insurance was initially recorded as prepaid.

Rent revenue earned: $7,000; the rent was initially prepaid by the tenant and credited to deferred rent revenue.

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

Multiple Choice

Option 1: $128,000
Option 2: $104,000.
Option 3: $113,000.
Option 4: $106,000.