Problem $5\mathrm{.}5$A $($Static$)$ Short Comprehensive Problem Including Both Adjusting and Closing Entries $($LO$5-1,$ LO$5-2,$ LO$5-3,$ LO$5-4,$ LO$5-6)$

Silver Lining, Incorporated, provides investment advisory services. The company adjusts its accounts monthly but performs closing entries annually on December $31.$ The firm$$s unadjusted trial balance dated December $31,$ current year, appears as follows:

SILVER LINING, INCORPORATED

Unadjusted Trial Balance

December $31,$ Current Year

Debits Credits

Cash $ $51,402$

Accounts receivable $2,400$

Office supplies $246$

Prepaid rent $1,440$

Prepaid insurance $324$

Office equipment $64,800$

Accumulated depreciation: office equipment $ $42,300$

Accounts payable $1,680$

Interest payable $432$

Income taxes payable $2,100$

Notes payable $10,800$

Unearned consulting services revenue $4,200$

Capital stock $36,000$

Retained earnings $9,600$

Dividends $1,200$

Consulting services revenue $72,000$

Office supplies expense $726$

Depreciation expense: office equipment $9,900$

Rent expense $4,230$

Insurance expense $1,212$

Salaries expense $32,520$

Interest expense $432$

Income taxes expense $8,280$

Totals $ $179,112$ $ $179,112$

Other Data

Accrued but unrecorded and uncollected consulting services revenue totals $$1,800$ at December $31,$ current year.

The company determined that $$3,000$ of previously unearned consulting services revenue had been earned at December $31,$ current year.

Office supplies on hand at December $31$ total $$132.$

The company purchased all of its equipment when it first began business. At that time, the estimated useful life of the equipment was six years $(72$ months$).$

The company prepaid its six$-$month rent agreement on October $1,$ current year.

The company prepaid its $12-$month insurance policy on March $1,$ current year.

Accrued but unpaid salaries total $$2,280$ at December $31,$ current year.

On June $1,$ current year, the company borrowed $$10,800$ by signing a $9-$month, $8$ percent note payable. The entire amount, plus interest, is due on March $1,$ next year.

The company$$s CPA estimates that income taxes expense for the entire year is $$9,000.$ The unpaid portion of this amount is due early in the next year.

Required:

a$-1.$ Prepare the necessary adjusting journal entries on December $31,$ current year.

a$-2.$ Prepare an adjusted trial balance dated December $31,$ current year.

b$-1.$ From the adjusted trial balance prepared in part a$-2,$ prepare an income statement for the year ended December $31,$ current year.

b$-2.$ From the adjusted trial balance prepared in part a$-2,$ prepare the statement of retained earnings for the year ended December $31,$ current year.

b$-3.$ From the adjusted trial balance prepared in part a$-2,$ 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$.$ Compute the company's average monthly insurance expense for January and February of the current year.

f$.$ Compute the company's average monthly rent expense for January through September of the current year.

g$.$ If the company purchased all of its office equipment when it first incorporated, for how long has it been in business as of December $31,$ current year?