Below is the trial balance of Conex Inc. at December 31, 2021 Conex Inc. Trial Balance December 31, 2021 Account Cash Accounts Receivable Prepaid Insurance Supplies Equipment Accumulated Depreciation- Equipment Notes Payable Unearned revenue Share Capital- Ordinary Dividends Retained Earnings Service Revenue Salaries expense Rent expense Advertising expense Total Debit $ 107,200 40,000 4,800 8,000 96,000 4,000 20,000 12,000 8,000 $ 300,000 Credit $ 8,000 8,800 6,000 147,200 50,000 80,000 $ 300,000 Other data: 1. Supplies on hand at December 31 are $2,500. 2. A utility bill for $1,000 has not been recorded and will not be paid until next month. (The appropriate liability account here is accounts payable) 3. The insurance policy was purchased on September 1, 2021 and is for a year. 4. $4,500 of unearned service revenue is recognized for services performed at the end of December. 5. The note payable was issued on October 1. It is a 9%, 6-month note. (The appropriate liability account here is interest payable) 6. The equipment was purchased before 2021. It has a 4-year period with no residual value. It is being depreciated at $24,000 per year. 7. Invoices representing $5,000 of services performed during the month have not been recorded as of December 31. Instructions: 1) Prepare the adjusting entries for the year ended December 31, 2021. 2) If each of the above adjustments was not made, show the effect on net income, shareholders equity, assets and liabilities accordingly, by forming a table as shown: Solution: Adjustment no. 1. 2. 3. 4. 5. 6. 7. Type of adjustment Equity Assets M Net income Liabilities Use the terms Overstated and Understated. Use N/A for any item that won't be affected by the adjustment.