Bangels Corp. delivers auditing services to both small companies and big corporations. The company performs adjusting entries monthly, whereas closing entries are prepared annually on December 31. An unadjusted trial balance dated December 31, current year, follows.

Bangels - Unadjusted trial balance December 31st current year
Cash	18.687,5
Accounts Receivable	112.500
Prepaid rent	6.250
Unexpired insurance policies	625
Office supplies	662,5
Office Equipment	187.500
Building	375.000
Acc depreciation Building	50.781,25
Acc Depreciation Office Equipment	25.391,25
Ac. Payable	1.875
Notes Payable due 3/1 year 2	150.000
Income tax payable	4.875
Unearned fees	6.875
Salaries payable	12.500
Interest payable	6.875
Capital stock	25.000
Retained Earnings	202.631,25
Dividends	12.500
Sales	1.250.000
Telephone expense	15.000
Office supply expense	31.250
Depreciation expense office equipment	21.485
Depreciation expense building	42.968,75
Rent expense	18.750
Insurance expense	6.875
Salary expense	875.000
Income tax expense	4.875
interest expense	6.875
Totals	1.736.804	1.736.804

By the end of December 2021, Mick Butcher, chief accountant of Bangels Corp is working to finish his accounting for the month. He realizes that he still needs to prepare the adjusting entries, and he has the following information: 1. Salaries earned by employees that have not yet been recorded or paid amount to 67,000. 2. Depreciation of the Office Equipment equipment is based on an estimated life of 8 years. The straight-line method is used. Depreciation of the Building is based on an estimated life of 20 years. The straight-line method is used. 3. The company signed an insurance contract by July 1st, 2021, for one year, with a value of 4,600. 4. An 18-month note payable in the amount of 1,200,000 had been obtained with an interest computed at an annual rate of 5 percent on May 1st, 2020. The entire 1,200,000, plus all the interest accrued over the 18-month life of the loan, is due in full on July 1st of the upcoming year. 5. Unrecorded Income Taxes Expense accrued in December amounts to 25% of Earnings before taxes. This amount will not be paid until March 30. 6. The company has just signed a new 450,000 contract for next year services with customer AD Blocker Corp and collected a 30% of the amount. 7. By December 31st the company has just sold the building for 330,000 cash. Prepare adjusting entries on General Journal format. Problem 2 (45 marks) Prepare an after-adjusting entries trial balance. (15 marks) Prepare an income statement for the year ended December 31, current year. (10 marks) Prepare an after closing Balance Sheet. (10 marks) Briefly evaluate the companys profitability and liquidity. (10 marks)