Helen Ortega opened a small tax-preparation service. At the end of its second year of operation, Ortega Tax Service had the trial balance that appears below.

The following information is also available:
a. Office supplies on hand, December 31, 2010, $225.
b. Insurance still unexpired, $100.
c. Estimated depreciation of office equipment, $795.
d. Telephone expense for December, $21; the bill was received but not recorded.
e. The services for all unearned tax fees had been performed by the end of the year.

Required
1. Open T accounts for the accounts in the trial balance plus the following: Office Supplies Expense; Insurance Expense; and Depreciation Expense-Office Equipment. Record the balances shown in the trial balance.
2. Determine the adjusting entries and post them directly to the T account.
3. Prepare an adjusted trial balance, an income statement, a statement of owner's equity, and a balance sheet. The owner made no investments during the period.
4. Why is it not necessary to show the effects of the above transactions on the statement of cashflows?

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Ortega Tax Service Trial Balance December 31, 2010 3,700 1,099 Accounts Receivable Prepaid Insurance Office Supplies Office Equipment Accumulated Depreciation- 7,100 Office Equipment Accounts Payable Unearned Tax Fees H. Ortega, Capital H. Ortega, Withdrawals Tax Fees Revenue Office Salaries Expense Advertising Expense Rent Expense Telephone Expense 5 770 6,939 6,000 21,926 8,300 650 2,400 $30,489 30,489