SECTION II: Problem-solving Question (Total 24 marks) (ALL WORKINGS MUST BE SHOWN IN THE ANSWER BOOK) QUESTION 1 The following is the unadjusted trial balance of the Hong Kong Child Care Corporation for the year of Hong Kong Child Care Corporation Unadjusted Trial Balance Dec 31,2017 Debit Balances 180,000 380,000 60,000 2,000,000 Credit Balances Cash Accounts receivable Prepaid insurance Equipment Accum depn equipment Accounts payable Salary payable Share Capital Ordinary Retained Earnings Service revenue Salary expense Rent expense Totals 400,000 20,000 74,000 1,080,000 396,000 2.290,000 980,000 660,000 4.260,000 4.260,000 The required adjustments for the year end were a) The $60,000 prepaid insurance was paid for the fire insurance covering the six months from August 1, 2017 onwards. 2018. By the end year, the unexpired insurance was for the month of January b) The S2,000,000 equipment was expected to use for 10 years with no residual value. Straiht line depreciation method is used. c) Hong Kong Child Care Corporation pays weekly wages every Friday for a five-day week. A tutor with weekly salary at $35,000 was employed since December 2017. Three days salary should be accrued at the year end. d) A customer sent her child to Hong Kong Child Care Corporation over the Christmas holidays (total five days) Hong Kong Child Care Corporation would charge this customer $900 per day. Hong Kong Child Care Corporation will bill the customer in January 2018. REQUIRED l) Journalize the adjusting entries at December 31, 2017 (ignore explanations). 8 marks) 2) Prepare a Statement of Comprehensive Income for the year ended December 31, 2017 and a Statement of Financial Position as at December 3, 2017 (16 marks)