The trial balance for Financial Strategies Service, Inc., on December 31 is presented on the following page.

e. The services for all unearned tax fees had been performed by the end of the year.

f. Estimated federal income taxes for the year, $1,800.
Required 1. Open T accounts for the accounts in the trial balance plus the following:
Income Taxes Payable; Insurance Expense; Office Supplies Expense; Depreciation Expense–Office Equipment; and Income Taxes Expense. Record the balances shown in the trial balance.
2. Determine the adjusting entries and post them directly to the T accounts.
3. Prepare an adjusted trial balance, an income statement, a statement of retained earnings, and a balance sheet.
4. User insight: Why is it not necessary to show the effects of the above transactions on the statement of cash flows?
Determining Adjusting Entries and Tracing Their Effects to Financial Statements

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Ozaki Tax Service, Inc. Trial Balance December 31, 20x7 Cash Accounts Receivable $ 2,268 1,031 Prepaid Insurance 240 Office Supplies 782 Office Equipment 7,100 Accumulated Depreciation-Office Equipment $ 770 Accounts Payable 635 Unearned Tax Fees 219 Common Stock 2,000 Retained Earnings 3,439 Dividends 6,000 Tax Fees Revenue 21,926 Office Salaries Expense 8,300 Advertising Expense 650 Rent Expense 2,400 Telephone Expense 218 $28,989 $28,989