1. Brave Heart Marketing Corp. (Company) provides marketing consultancy to Telecom Scotland. Adjusting entries are performed on a monthly basis. Below is the unadjusted trial balance for Brave Heart Marketing is ended December 31, 2020. According to balances given in this trial balance and transactions below, please fulfill following instructions; Prepare adjusting entries in journal and post to ledger (T accounts). Describe the type of adjusting entries in transactions 2 and 7. State the effect on the Financial Statements if adjusting entries (2&7) were not performed.

b- Prepare the adjusted trial balance of Brave Heart Marketing ended December 31, 2020. c- Prepare the financial statements of 2020 (Income statement, statement of retained earnings and balance sheet). d- Prepare the closing entries.

Unadjusted Trial Balance of Brave Heart Corp. 31-Dec-2020 Accounts Debit Balance Credit Balance Cash 2160 Accounts Receivable 1250 Office Supplies 180 Prepaid Insurance 240 Machinery 3400 Accumulated Depreciation 600 Accounts Payable 700 Unearned Revenue 460 Capital Stock 2435 Retained Earnings 2435 Dividends 400 Service Revenue 2900 Rent Expense 400 Salaries Expense 1500 Total 9530 9530

Transactions occurred in December 2020;

1. Expired insurance in December is $40. 2. Office supplies on hand at the end of December are found $75. 3. Depreciation for December is $100. 4. Accrued salaries but not recorded for December are $120. This amount will be paid in January 2017. 5. Accrued taxes but not recorded for December are $200. This amount will be paid in March 2017. 6. Revenues earned but not billed and recorded in December totalled $300. This amount will be collected later. 7. Company provided marketing consultancy to Telecom Scotland in December totalled $160. This amount has been paid before by Telecom Scotland.