Allen & Co. is an architecture firm with offices in several of the larger cities in the southwestern U.S. Allens fiscal year-end is December 31, and it prepares financial statements just once a year, at year-end. For bookkeeping purposes, Allen has adopted a policy to record payments and collections in advance into asset and liability accounts, respectively. The companys unadjusted trial balance at December 31, 2021 is shown below. All accounts have normal-side balances.

Accounts Payable	$ 217,230
Accounts Receivable	403,810
Accumulated Depreciation Buildings	137,275
Accumulated Depreciation Equipment	254,100
Advertising Expense	152,100
Allowance for Doubtful Accounts	11,785
Buildings	685,250
Cash	536,140
Common Stock ($1 par)	105,000
Dividends Declared	37,500
Equipment	728,400
Insurance Expense	46,730
Interest Expense	31,490
Land	151,240
Notes Payable	632,000
Prepaid Insurance	235,920
Retained Earnings	789,305
Salaries and Wages Expense	831,615
Service Revenue	1,694,100
Supplies	26,080
Unearned Rent Revenue	153,840
Utilities Expense	128,360

Additional information available at year-end is as follows:

1. Allen sometimes leases unused space in its buildings to other businesses. On August 1, 2021, a new tenant signed a 1-year lease and paid the full 12 months rent of $153,840 in advance. The lease began on that date and runs through July 31, 2022.

2. Allen started the year 2021 with a Supplies account balance of $15,850. During the year, Allen made several purchases of supplies totaling $10,230. A physical count at year-end 2021 revealed the company had a total of $19,515 of supplies on hand.

3. Allen performed $86,710 of architectural services for several clients in December 2021 that it has not yet billed, recorded or collected.

4. On October 12, 2021, Allen paid $152,100 for internet ads to run evenly over a 9-month period, starting November 1, 2021. Note Contrary to the companys normal practice, Allens bookkeeper recorded the prepayment into the Advertising Expense account. Give the adjusting entry needed when a company uses the expense approach to record a payment in advance.

5. The Notes Payable balance relates to a bank loan taken in 2020 that is payable in full on March 31, 2026. The loan agreement specifies that Allen pay interest annually on March 31 at the rate of 7.60% per year. Allens bookkeeper made the proper entry for the first interest payment, on March 31, 2021. (Hint Think about the entry Allen made on March 31, 2021.)

6. Allen purchased its buildings in 2012 and its equipment in 2017. Allen depreciates its fixed assets according to the straight-line method. For the buildings, it uses estimates of 35 years for the useful life and $120,000 for the salvage value. For the equipment, it uses estimates of 9 years for the useful life and $75,000 for the salvage value.

7. Allen operates 5 days a week, Mondays through Fridays. Employees are paid each Friday, for hours worked through the previous Friday. On Friday, December 31, 2021, the last payday in 2021, Allen paid its employees for hours worked during the week of December 20-24. The employees then worked their regular schedule through the end of the year. Allens payroll averages $3,205 per day.

8. On May 1, 2021, Allen purchased a 24-month insurance policy for $235,920 and paid the full cost of the policy in advance. The policy provides coverage through April 30, 2023.

9. Allen estimates that 8.45% of the 2021 year-end accounts receivable balance will not be collected.

10. The companys income tax rate for the year is 25%. (Hint The income tax rate is applied to the companys income after all revenues and expenses have been considered except for the income tax charge.)

Instructions

Complete the following three tasks relating to Allen & Co.s accounting process at year-end 2021:

(a) Prepare an unadjusted trial balance as of December 31, 2021. List the accounts in an appropriate trial balance order. <0.5>

(b) Prepare the adjusting journal entries needed at December 31, 2021. <13.5>

(c) Prepare an adjusted trial balance as of December 31, 2021. List the accounts in an appropriate trial balance order. <1.0>