The following are the trial balance and other information related to Yorkis Perez, a consulting engineer.

1. Fees received in advance from clients R$6,000.

2. Services performed for clients that were not recorded by December 31, R$4,900.

3. Bad debt expense for the year is R$1,430.

4. Insurance expired during the year R$480.

5. Equipment is being depreciated at 10% per year.

6. Yorkis Perez gave the bank a 90-day, 10% note for R$7,200 on December 1, 2022.

7. Rent of the building is R$750 per month. The rent for 2022 has been paid, as has that for January 2023.

8. Salaries and wages earned but unpaid December 31, 2022, R$2,510.

Instructions

a. From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2022.

b. Prepare an income statement for 2022, a statement of owner’s equity, and a classified statement of financial position. Yorkis Perez withdrew R$17,000 cash for personal use during the year.

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Yorkis Perez, Consulting Engineer Trial Balance December 31, 2022 Debit Credit Cash R$ 29,500 Accounts Receivable 49,600 Allowance for Doubtful Accounts R$ 750 Supplies 1,960 Prepaid Insurance 1,100 Equipment 25,000 Accumulated Depreciation-Equipment 6,250 Notes Payable 7,200 Yorkis Perez, Capital 35,010 Service Revenue 100,000 Rent Expense Salaries and Wages Expense 9,750 30,500 Utilities Expense 1,080 Office Expense 720 R$149,210 R$149,210