Assignment [20 Marks] Principles of Financial Accounting (0502200; 0502501) Credit Cash Below is the trial balance of West Ltd. at December 31, 2020 West Ltd. Trial Balance December 31, 2020 Account Debit $ 50,000 Accounts Receivable 20,000 Prepaid Insurance 4,800 Supplies 4,000 Equipment 48,000 Accumulated Depreciation- Equipment Notes Payable Unearned revenue Share Capital- Ordinary Dividends 2,000 Retained Earnings Service Revenue Salaries expense 10,000 Rent expense 6,000 Utilities expense 4,000 Total $ 148,800 $ 4,000 4,400 3,000 72,400 25,000 40,000 S 148.800 Other data: 1. Supplies on hand at December 31 are $1,000. 2. Accrued Salaries at the end of the December of $2,500 were neither recorded nor paid. 3. The insurance policy was purchased on December 1, 2020 and is for a year. 4. $2,000 of unearned service revenue is recognized for services performed at the end of the month. 5. The interest accrued but not yet recorded or paid on the note payable is $300 for the month of December 6. The equipment has a 10-year period with no residual value. It is being depreciated at $400 per month 7. Invoices representing $6,000 of services performed during the month have not been recorded as of December 31. Instructions: no. 1) Prepare the adjusting entries for the month of December. 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 Type of Net Equity Assets Liabilities adjustment income 1. 2. 3. 4. 5. 6. 7. Use the terms Overstated and Understated. Use N/A for any item that won't be affected by the adjustment. 3) Post the adjusting entries 4) Prepare an adjusted trial balance 5) After preparing the adjusted trial balance, prepare the necessary closing entries on December 31, 2020. 6) Post the closing entries 7) Prepare the Post-Closing Trial Balance