Tammy Touchtone operates a talent agency called Touchtone Talent Agency. Some clients pay in advance for services; others are billed after services have been performed. Advance payments are credited to an account entitled Unearned Agency Fees. Adjusting entries are performed on a monthly basis. Closing entries are performed annually on December 31. An unadjusted trial balance dated December 31, current year, follows. (Bear in mind that adjusting entries have already been made for the first 11 months of current year, but not for December.)

Other Data
1. Office equipment is being depreciated over 60 months (five years).
2. At December 31, current year, $2,500 of previously unearned agency fees had been earned.
3. Accrued but unrecorded and unpaid salary expense totals $1,360 at December 31, current year.
4. The agency pays rent quarterly (every three months). The most recent advance payment of
$1,800 was made November 1, current year. The next payment of $1,800 will be made on February 1, next year.
5. Accrued but unrecorded and uncollected agency fees earned total $3,000 at December 31, current year.
6. Office supplies on hand at December 31, current year, total $530.
7. On September 1, current year, the agency purchased a six-month insurance policy for $750.
8. On December 1, current year, the agency borrowed $6,000 by signing a 3-month, 9 percent note payable. The entire amount borrowed, plus interest, is due March 1, next year.
9. Accrued income taxes payable for the entire year ending December 31, current year, total $3,900. The full amount is due early in the next year.
Instructions
a. Prepare the necessary adjusting journal entries on December 31, current year. Also prepare an adjusted trial balance dated December 31, current year.
b. From the adjusted trial balance prepared in part a, prepare an income statement and statement of retained earnings for the year ended December 31, current year. Also prepare the company's balance sheet dated December 31, current year.
c. Prepare the necessary year-end closing entries.
d. Prepare an after-closing trial balance.
e. Assume that the agency purchased all of its office equipment when it first began business activities. For how many months has the agency been in operation?
f. Has the agency's monthly office rent remained the same throughout the year? If not, has it gone up or down? Explain.
g. Has the agency's monthly insurance expense remained the same throughout the year? If not, has it gone up or down? Explain.

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TOUCHTONE TALENT AGENCY UNADJUSTED TRIAL BALANCE DECEMBER 31, CURRENTYEAR 35,300 1,200 375 900 15,000 Unexpired insurance policies 串12.000 1,500 6,000 3,200 8,000 20,000 10,800 Note payable (due 3/1/year 2) Income taxes payable.... Unearned agency fees... Retained earnings.. . Dividends 800 46,500 480 1,130 2,750 6,100 1,175 24,640 Telephone expense . Office supply expense... 3,200- $108,000 $108,000 Income taxes expense..