Savory Ltd. is completing the information-processing cycle at its fiscal year-end, December 31. Following are the correct account balances at December 31, both before and after the adjusting entries.

		Trial Balance, December 31 of the Current Year
		UNADJUSTED		ADJUSTED
Items		Debit		Credit			Debit		Credit
a.	Cash	$	12,600				$	12,600
b.	Service revenue receivable							560
c.	Prepaid insurance		840					560
d.	Equipment		168,280					168,280
e.	Accumulated depreciation, equipment			$	42,100				$	54,000
f.	Accrued advertising payable									6,580
g.	Contributed capital				112,000					112,000
h.	Retained earnings, January 1				19,600					19,600
i.	Service revenue				64,400					64,960
j.	Salary expense		56,380					56,380
k.	Depreciation expense							11,900
l.	Insurance expense							280
m.	Advertising expense							6,580
		$	238,100	$	238,100		$	257,140	$	257,140

Required:

1. Compare the amounts in the columns before and after the adjusting entries to reconstruct the adjusting entries made at the end of the current year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2-a. Compute the amount of net earnings, assuming that it is based on the amounts (a), before adjusting entries, and (b), after adjusting entries.

2-b. Which net earnings amount is correct?

multiple choice

Amounts after adjusting entries

Amounts before adjusting entries

3. Compute the earnings per share, assuming that 4,000 shares are outstanding all year. (Round the final answer to 2 decimal places.)

4. Compute the net profit margin ratio and the return on equity, assuming that contributed capital did not change during the year. (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4).)

5. Prepare the closing entries at December 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)