Savory Ltd. is completing the information-processing cycle at its fiscal year end, December 31, 2018. Following are the correct account balances at December 31, 2018, both before and after the adjusting entries for 2018:

Required:1. Compare the amounts in the columns before and after the adjusting entries to reconstruct the adjusting entries made in 2018. Explain each adjustment.2. Compute the amount of net earnings, assuming that it is based on the amounts (a), before adjusting entries, and (b), after adjusting entries. Which net earnings amounts correct? Explain.3. Compute the earnings per share, assuming that 4,000 shares are outstanding all year.4. Compute the net profit margin ratio and the return on equity, assuming that contributed capital did not change during the year. What do the computed ratios suggest to you about the company?5. Prepare the closing entries at December 31, 2018.

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Trial Balance, December 31, 2018 After Adjusting Entries Before Adjusting Entries Adjustments Credit Debit Items Debit Credit Debit Credit $ 12,600 $ 12,600 a. Cash b. Service revenue receivable 560 c. Prepaid insurance d. Equipment e. Accumulated depreciation, equipment f. Accrued advertising payable g. Contributed capital h. Retained earnings, January 1, 2018 840 560 168,280 168,280 $ 54,000 $ 42,100 6,580 112,000 112,000 19,600 19,600 i. Service revenue 64,960 64,400 j. Salary expense k. Depreciation expense 56,380 56,380 11,900 |1. Insurance expense 280 m. Advertising expense 6,580 $238,100 $238,100 $257,140 $257,140