It is December 31, 2020 and Bob wants to know how well this is going and at this point he has more or less hired you to do his books and statements. You can declare a yearend at any point during the year, however when Bob incorporated, he chose December 31 to facilitate filing a corporate tax return that is more straightforward if a business has a December 31 yearend. Since he incorporated ESER and started business on September 1, 2020, the first set of financial statements will be prepared for a 4month period. After journalizing the transactions that occurred between September 1 and December 31, 2020, you prepared the following unadjusted trial balance as at December 31, 2020: Economy Small Engine Repair Ltd. Unadjusted Trial Balance December 31, 2020 Account Name Dr. Cr. Cash $12,700 Accounts receivable 1,350 Inventory 2,300 Prepaid Insurance 1,800 Repair equipment 6,250 Computer equipment 2,500 Accounts payable $550 Bank loan payable 5,000 Common shares 15,000 Dividends 9,500 Revenue 22,750 Parts expense 5,200 Advertising expense 750 Sundry expense 950 $43,300 $43,300 You also gathered the following additional information: In your files, you came across ESERs insurance policy. The $1,800 premium was paid on October 9. The policy provides insurance protection from September 1, 2020 to August 31, 2021. It is currently in prepaid expenses and you know some potion needs to be in expense this year. Also in your files, you found the invoice for the purchase of an adjustable height table on October 14. The table allows you to place a lawn mower or snow blower on it and adjust the working height so that you are more comfortable and dont injure your back. You paid the $1,250 cost as soon as the table was delivered and placed it in the equipment account. (Hint: watch the dates here.) After talking to his cousin who owns Jakes Tool Repair, you estimated that the equipment purchased to start business in September as well as the adjustable table will last 8 years. You also remembered that the supplier of the computer equipment purchased in August advised you could expect to use it for 3 years before it will require replacement. You decided that you will record a full month of depreciation if an asset is used at any time during the month. On December 31, you received a $750 down payment from a client on a major overhaul of three machines to be done in 2021. This transaction has not been recorded yet. Also on December 31, you paid the interest owing on the bank loan payable. Although the bank originally required interest be paid on the last day of every month, it later agreed to allow the first interest payment to be made on December 31. This has also not been recorded yet. You recall that this loan was taken out in September and due October 2022. The interest rate is 5% per year and will be paid for every month the loan is outstanding including September 2020. Late in the day on December 31, you received a phone call from a client. It was snowing and the client needed his snow blower fixed so he could clear his walks for a New Years Eve function. You finished the order just in time to get it to the client for their dinner. The client will pay $550 for the work in January 2021. After you completed the New Years Eve emergency repair, you counted the inventory of parts, oils etc. The new amount for inventory remaining totaled $1,650. Before you finished preparing and posting the adjusting entries, you found the utility bills for the period from September to December 2020. The business portion of the utility bills totaled $235 and will be paid in January 2021. Based on the profit before income tax for the period ended December 31, 2020, you expect to pay Canada Revenue Agency $3,700 in corporate income tax. Tasks 1. You decided to prepare the adjusting entries (in good form) required due to the additional information provided above. 2. After preparing the adjusting entries, you then decided to post the adjustments to T accounts. 3. Lastly, using the account balances determined in task 2, you sat down to prepare the December 31, 2020 adjusted trial balance.