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, 2024.
2. A count of supplies on December 31, 2024, 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, 2024.
5. The three-year, 5% note payable was issued on April 1, 2024. 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, 2024, were $915.
7. On December 31, 2024, 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 2024 was $210. It has not been recorded or paid.
The following trial balance was prepared before adjustments:

Instructions
a. Prepare adjusting entries for the year ended December 31, 2024, as required.
b. Prepare an adjusted trial balance at December 31, 2024.
c. Prepare an income statement and a statement of owner’s equity for the year ended December 31, 2024, and a balance sheet as at December 31, 2024.

Taking It Further

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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Cash Accounts receivable Prepaid insurance Supplies SHEK ENTERPRISES Trial Balance December 31, 2024 Equipment Accumulated depreciation-equipment Accounts payable Unearned revenue Notes payable M. Shek, capital M. Shek, drawings Service revenue Interest expense Rent expense Salaries expense Telephone expense Debit $ 6,725 10,915 5,940 8,680 24,240 85,000 350 15,600 50,225 2,365 $210,040 Credit $ 10,100 5,765 5,550 14,000 13,750 160,875 $210,040