Gilca Ltd. is completing the information- processing cycle at the end of its fiscal year, December 31, 2014. The correct account balances at December 31, 2014, both before and after the adjusting entries for 2014, are shown below:

Required:
1. Compare the amounts in the columns before and after the adjusting entries to reconstruct the adjusting entries made in 2014. Explain each adjustment.
2. Compute the net earnings for 2014, assuming that it is based on the amounts (a) before adjusting entries and (b) after adjusting entries. Which net earnings amount is correct? Explain.
3. Compute the earnings per share, assuming that 5,000 shares are outstanding.
4. Compute the net profit margin ratio and the return on equity, assuming that contributed capital did not change during the year. What do the computed ratios suggest to you about the company?
5. Prepare the closing entries at December 31, 2014.

Trial Balance, December 31, 2014 Before Adjusting Entries Adjustments Debit After Adjusting Entries Credit Credit Credit Debit Items a. Cash b. Service revenue receivable S 18,000 $ 18,000 1,200 210,000 800 210,000 d. Property, plant, and equipment e. Accumulated depreciation, PP&E f. Income taxes payable g. Deferred revenue h. Contributed capital 52,500 16,000 110,000 21,700 83,000 $70,000 6,500 8,000 110,000 21.700 92,500 Retained eamings, January 1, 2014 j. Service revenue k. Salary expense I Depreciation expense m. Rent expense n. Income tax expense 54,000 54,000 17,500 $283,200 283,200 $308,700 $308,700