Question 2

(30 marks)

Required:

Prepare the proper ADJUSTING

journal entries for the following events.

Also, prepare a balance sheet after

adjusting entries have been made.

a.

Unearned service revenue NOT YET earned at

year end, $2,000.

Dr.

Cr.

b.

Depreciation for the current year amounts to

$4,500.

Dr

Cr.

c.Prepaid insurance consists of a policy purchased

on January 1, 2020 for a 15 months coverage

.

Dr. Insurance Expense $15,000

Cr. Prepaid insurance $15,000

d.

Supplies on hand/counted at year end amount to

$1,200.

Dr.

Cr.

e.

Accrued salaries on December 31, 2020, amount to

$2,500.

Dr.

Cr.

f.

The bank loan was received on March 1, 2020, and

the annual interest rate was 12%.

Dr.

Cr.

g.

Rent is $500/month, and January, 2021 rent is

included in the trial balance amount.

Dr.

Cr.

h.

Corporate income tax is 20% of net income before

tax.

Dr.

Cr.

Prepare a balance sheet based on the unadjusted trial