Shek Enterprises is owned by Memphis Shek and has a December 31 fiscal year end. The company prepares adjusting entries on an annual basis. Some additional information follows:

1. A one-year insurance policy was purchased on May 1, 2021.

2. A count of supplies on December 31, 2021, shows $1,290 of supplies on hand.

3. The equipment has an estimated useful life of six years.

4. An analysis of the Unearned Revenue account shows that $1,550 remains unearned at December 31, 2021.

5. The three-year, 5% note payable was issued on April 1, 2021. Interest is payable every six months on April 1 and October 1 each year. The principal is payable at maturity.

6. Salaries accrued to December 31, 2021, were $915.

7. On December 31, 2021, the company had provided services of $2,000 but had not billed or recorded the service revenue of $2,000.

8. The telephone bill for December 2021 was $210. It has not been recorded or paid. (Use the Accounts Payable account.)

The following trial balance was prepared before adjustments:

Instructions

a. Prepare adjusting journal entries for the year ended December 31, 2021, as required.

b. Prepare an adjusted trial balance at December 31, 2021.

c. Prepare an income statement and a statement of owner?s equity for the year ended December 31, 2021, and a balance sheet at December 31, 2021.

Comment on the company?s results of operations and its financial position. In your analysis, refer to specific items in the financial statements.

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SHEK ENTERPRISES Trial Balance December 31, 2021 Debit Credit Cash $ 6,725 Accounts receivable 10,915 Prepaid insurance Supplies Equipment Accumulated depreciation-equipment Accounts payable Note payable 5,940 8,680 24,240 $ 10,100 5,765 14,000 Unearned revenue 5,550 M. Shek, capital M. Shek, drawings 13,750 85,000 Service revenue 160,875 Interest expense Rent expense Salaries expense Telephone expense 350 15,600 50,225 2,365 $210,040 $210,040