The following trial balance and additional data are for South Sea Tours, Inc.:

The company consistently followed the policy of initially debiting all prepaid items to asset accounts.
1. The buildings have an expected life of 50 years with no salvage value.
2. The office equipment has an expected life of 10 years with no salvage value.
3. Accrued interest on notes receivable is \(\$ 450\).
4. Accrued interest on the notes payable is \(\$ 1,000\).
5. Accrued salaries are \(\$ 2,100\).
6. Expired prepaid insurance is \(\$ 3,750\).
7. Expired prepaid advertising is \(\$ 16,500\).

a. Prepare a 12-column work sheet for the year ended December 31, 1999. You need not include account numbers. Briefly explain the entries in the Adjustments columns at the bottom of the work sheet, as was done in Illustration 4.2.

b. Prepare the required closing entries.

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SOUTH SEA TOURS, INC. Trial Balance December 31, 1999 Debits Credits Cash.. Accounts Receivable Prepaid Insurance $109,050 133,750 4,350 Prepaid Advertising 18,000 Notes Receivable 11,250 Land. 90,000 Buildings. 165,000 Accumulated Depreciation-Buildings $ 49,500 Office Equipment 83,400 Accumulated Depreciation-Office Equipment. 16,680 Accounts Payable 56,850 Notes Payable. 75,000 Capital Stock 240,000 Retained Earnings, January 1, 1999 47,820 Dividends 30,000 Service Revenue 368,350 Salaries Expense 96,000 Travel Expense Interest Revenue Interest Expensc 111,000 600 3,000 $854,800 $854,800