Cullumber Consulting Ltd. has been in business for several years, providing software consulting to its customers on an annual contract or special assignment basis. All work is done over the Internet, although some travel is occasionally required for meeting with customers to negotiate contracts and renewals of contracts, as well as resolving possible disputes in invoicing for their services. Cullumber operates out of rented premises and has a modest investment in equipment that is used by the consulting team. Cullumber is a private company that follows ASPE and that has a calendar year end. At the end of each year, Cullumber obtains the services of an accountant to complete the annual accounting cycle of the business and prepare any year-end adjusting of journal entries, financial statements, and corporate tax returns. Upon arrival in early 2020, the accountant was given an unadjusted trial balance and obtained the following additional information to complete his work. Cullumber Consulting Ltd. Unadjusted Trial Balance December 31, 2020 Account Debit Credit Petty cash $612 Cash 18,870 Accounts receivable 45,594 Allowance for doubtful accounts 1,836 Interest receivable 0 Prepaid insurance 4,080 Supplies 2,040 FV-NI investments 20,400 Notes receivable 25,500 Equipment 95,880 Accumulated depreciation-equipment 36,720 Goodwill 22,440 Bank loans 18,360 Accounts payable 8,109 Salaries and wages payable 0 Interest payable 0 Unearned revenue 4,284 Litigation liability 0 Income tax payable 30,600 Common shares 36,720 Retained earnings 60,996 Dividends 26.520 Service revenue 247,623 Interest income 1,063 Unrealized gain or loss 0 Gain on disposal of equipment 306 Depreciation expense 0 Office expense 4.182 Travel expense 6.834 Insurance expense 918 Interest expense 1,326 Utilities expense 765 Rent expense 55,080 Salaries and wages expense 50,500 Supplies expense 0 Bad debt expense 0 Telephone and Internet expense 3,264 Repairs and maintenance expense 612 Litigation expense 0 Income tax expense 0 $416,017 $416,017 Additional information: 1. Management has been going over the list of accounts receivable for possible accounts that are not collectible for $714 must be written off. In the past, 5% of the balance of all accounts receivable has been the basis of an the required balance in the allowance for doubtful accounts. Management feels that this estimate should be f 2020. 2. After doing a count of supplies on hand, management determined that $408 of supplies remained unused at 2020. 3. The account balance in Prepaid Insurance of $4,080 represents the annual cost of the renewal of all of Cullum insurance policies that expire in one year. The policies' coverage started April 1, 2020. 4. FV-NI Investments are long-term investments. The fair value of the portfolio of investments was $22,950 at 5. In January 2020, some old equipment was sold for proceeds of $306 cash. The entry made when depositing the cash was debit Cash, credit Gain on Disposal of Equipment. The original cost of the equipment was $4,386 and the accumulated depreciation was $4,284. 6. The depreciation expense for the remaining equipment was calculated to be $7,344 for the 2020 fiscal year. 7. The notes receivable from customers are due October 31, 2023, and bear interest at 5%, with interest paid semi-annually. The last interest collected related to the notes was for the six months ended October 31, 2020. 8. Bank loans are demand bank loans for working capital needs and vary in amount as the needs arise. The bank advised that the interest charge for December 2020 that will go through on the January 2021 bank statement is in the amount of $204. 9. Unpaid salaries and wages at December 31, 2020, totalled $806. These will be paid as part of the first payroll of 2021. 10. After some analysis, management informs the accountant that the Unearned Revenue account should have a balance of $1,020. 11. Cullumber was sued by one of its former clients for $51,000 for giving bad advice and instructions. Upon discussion with legal counsel, it has been agreed that it will likely take $5,100 to settle this dispute out of court, in the next fiscal year. No entry has yet been recorded. 12. The accountant is told that a sublet lease arrangement for some excess office space has been negotiated and signed. It will provide Cullumber with rent revenue starting on February 1, 2021, at a rate of $408 per month. 13. Cullumber has been making income tax instalments as required by the Canada Revenue Agency. All instalment payments have been debited to the Income Taxes Payable account. 14. After recording all of the necessary adjustments and posting to the general ledger, management drafted a new trial balance to arrive at the income before income taxes. Using this result, the accountant prepared the tax returns, and determined that a tax rate of 28% needed to be applied to the income before income tax amount. The necessary adjusting entry for taxes has not yet been recorded. Prepare all necessary adjusting and correcting entries required based on the information given. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account t and enter Ofor the amounts. Round answers to O decimal places, e.g. 5,275.) No. Account Titles and Explanation Debit Credit 1. Allowance for Doubtful Accounts 714 Accounts Receivable 714 (To write off accounts that are not collectible) Bad Debt Expense Allowance for Doubtful Accounts (To record allowance for doubtful accounts) 2. Supplies Expense Supplies 3. Insurance Expense Prepaid Insurance 4. FV-NI Investments Unrealized Gain or Loss - FV-NI 5. Accumulated Depreciation - Equipment 5. Accumulated Depreciation - Equipment Gain on Disposal of Equipment Equipment 6. Depreciation Expense Accumulated Depreciation - Equipment 7. Interest Receivable Interest Income 8. Interest Expense Interest Payable 9. Salaries and Wages Expense Salaries and Wages Payable 10. Unearned Revenue Service Revenue 11. Litigation Expense Litigation Liability 12. No Entry O No Entry o 13. Income Tax Expense Income Tax Payable 14. No Entry 0 No Entry 0