Silver Lining, Inc., provides investment advisory services. The company adjusts its accounts monthly, but performs closing entries annually on December 31. The firm’s unadjusted trial balance dated December 31, 2015, is shown on the following page.

Other Data

1. Accrued but unrecorded and uncollected consulting services revenue totals $1,500 at December 31, 2015.

2. The company determined that $2,500 of previously unearned consulting services revenue had been earned at December 31, 2015.

3. Office supplies on hand at December 31 total $110.

4. The company purchased all of its equipment when it first began business. At that time, the estimated useful life of the equipment was six years (72 months).

5. The company prepaid its six-month rent agreement on October 1, 2015.

6. The company prepaid its 12-month insurance policy on March 1, 2015.

7. Accrued but unpaid salaries total $1,900 at December 31, 2015.

8. On June 1, 2015, the company borrowed $9,000 by signing a nine-month, 8 percent note payable. The entire amount, plus interest, is due on March 1, 2016.

9. The company’s CPA estimates that income taxes expense for the entire year is $7,500. The unpaid portion of this amount is due early in 2016.

Instructions

a. Prepare the necessary adjusting journal entries on December 31, 2015. Prepare also an adjusted trial balance dated December 31, 2015.

b. From the adjusted trial balance prepared in part a, prepare an income statement and statement of retained earnings for the year ended December 31, 2015. Also prepare the company’s balance sheet dated December 31, 2015.

c. Prepare the necessary year-end closing entries.

d. Prepare an after-closing trial balance.

e. Compute the company’s average monthly insurance expense for January and February of 2015.

f. Compute the company’s average monthly rent expense for January through September of 2015.

g. If the company purchased all of its office equipment when it first incorporated, for how long has it been in business as of December 31, 2015?

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SILVER LINING, INC. UNADJUSTED TRIAL BALANCE DECEMBER 31, 2015 Debit Credit $ 42,835 2,000 Cash... Accounts receivable. Office supplies .. 205 1,200 Prepaid rent Unexpired insurance Office equipment . Accumulated depreciation: office equipment Accounts payable.. Interest payable .. 270 54,000 $ 35,250 1,400 360 Income taxes payable Notes payable .. Unearned consulting services revenue Capital stock .. Retained earnings 1,750 9,000 3,500 30,000 8,000 1,000 Dividends... Consulting services revenue Office supplies expense... 60,000 605 Depreciation expense: office equipment Rent expense. Insurance expense 8,250 3,525 1,010 Salaries expense 27,100 Interest expense. 360 Income taxes expense 6,900 $149,260 $149,260 Totals