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Question 8 Harris and Smith, Attorneys-at-Law, maintains its books on a cash basis. During 2021, the law firm collected $545,000 for services rendered to its clients and paid out $412,000 in expenses. Here are account balances for various accounts at the beginning and end of the fiscal year: Will change be added or subtracted to determine accrual basis income? Account 1/1/2021 12/31/2021 Accounts receivable $55,000 $62,000 4,500 [[1]] [2] Prepaid insurance 6,000 Prepaid rent 9,200 8,200 [3] Deferred service revenue 9,200 11,000 Accrued liabilities (for various expenses) [4] [5] 12,200 15,600 Accrual basis net income [6] In addition, depreciation expense on office equipment is $22,000. Required: For each account listed, indicate whether the change should be added to or subtracted from cash basis income to determine accrual basis income. Type added or subtracted for 1-5 and type a value for #6 - no dollr sign, no period, use a comma. Determine the accrual basis net income for 2021. Question 5 When King Corporation pays insurance premiums, the transaction is recorded as a debit to prepaid insurance. Additional information for the year ended December 31 is as follows: Prepaid insurance at January 1 S Insurance expense recognized during the year 52,500 218,750 61,250 Prepaid insurance at December 31 What was the total amount of cash paid by Castle for insurance premiums during the year? A) $218,750 B) $166,250 C) $210,000 D) $227,500