(d) Record its year-end closing journal entries. Explanations are NOT required. (14 marks) Information on adjusting entries: (1) Accrued, but unrecorded and unpaid Salaries amounted to $14,000. (2) On 1 July 2021, The Company borrowed $84,000 by signing a 2-year note payable at 8% annual interest rate. The entire note, plus 2 years' accrued interest, is due on 30 June 2023. (3) During December 2021, the Company purchased supplies costing $1,000 by cash. No entry has been made. Supplies on hand were $12,000 on 31 December, 2021. (4) On 1 August, 2021, the company paid for the rental of spa centre for 12 months in advance. (5) Spa coupons amounting $16,000 were redeemed in December 2021 for treatment. (6) The Company estimated that the income taxes expense for the entire year was $24,800, which to be paid next year. (7) On 31 December, 2021, a customer has bought a 2-day pass for using the spa facilities on 31 December, 2021 and January 1, 2022 for $2,000. The total amount for the 2-day pass will be paid by the customer when departing on January 1, 2022. (8) On 31 December, 2021, the owner has purchased a fitness equipment amounting $120,000 for her personal use. (9) The estimated useful life of equipment is five years and straight-line depreciation method is adopted. Depreciation expense had been updated to end of October 2021. (10) On 31 December, 2021, the Company declared a cash dividend of $0.20 per share to be paid on 31 March 2022. Required: (a) (b) (c) Prepare the necessary adjusting journal entries on 31 December 2021 to bring the financial records of Relax Spa Company up-to-date. Use the account titles given in the Trial Balance or create new accounts where appropriate. Show your workings. Explanations are NOT required. If no adjusting entries are required, state "No entry" and name the accounting principle applied. (22 marks) Prepare the income statement for the year ended 31 December 2021, showing breakdown of items under the captions of Revenues, Expenses, Profit before Taxes, Profit after Taxes. (12 marks) Prepare the statement of financial position as of 31 December 2021, showing breakdown of items under the captions of Total Assets, Total Liabilities, Total Shareholders' Equity and Total Liabilities & Shareholders' Equity. (22 marks) Question 1 (70 marks) Relax Spa Company is engaged in providing facial and body treatment in a spa centre. Customers are required to purchase spa coupons in advance. Coupons are redeemed when customers complete the treatment and the Company records income. The Company also sells day pass for using the spa facilities and records income. The Company records all income in "Service revenue. Adjusting entries are performed on a monthly basis. Closing entries are performed annually on December 31. Below is the Company's unadjusted trial balance at the year ended 31 December, 2021. Relax Spa Company Unadjusted Trial Balance 31 December, 2021 Account Title Cash Debit $ Credit $ 428,800 Accounts receivable 10,000 Prepaid rent 72,000 Supplies 13,000 Equipment 240,000 Accumulated depreciation: Equipment 80,000 Accounts payable 48,000 Income taxes payable 18,200 Unearned revenue 42,000 8% Notes payable 84,000 Interest payable 2,800 Share capital ($2 per share) 200,000 Retained earnings 57,160 Service revenue 608,000 Salaries expense 100,000 Rent expense 182,000 Insurance expense 24,000 Depreciation expense: Equipment 40,000 Supplies expense 6,000 Interest expense 6,160 Income taxes expense 18,200 $1,140,160 $1,140,160