Jasper Consulting Ltd has been providing social media consulting services to its customers for several years. The company provides consulting on an annual contract or special assignment basis. All work is done at the customer's site hence travel is required. Jasper operates out of rented premises and has a modest investment in equipment that is used by the consulting team. Jasper is a private company (shares are largely held by the Jasper family members) that follows ASPE and has a calendar year-end. At the end of each year, Jasper obtains the services of your accounting firm to complete the annual accounting cycle of the business and prepare any year-end adjusting of journal entries, and the financial statements. This year, you and a colleague have been sent by your accounting firm to prepare all the necessary work. Upon arrival, you were provided with an unadjusted trial balance (see the Adjusted Trial Balance worksheet in the Excel File provided) and obtained the following additional information to complete this work.

Additional information:

1.Management has been going over the list of accounts receivable for possible accounts that are not collectible. One account for $4,500 must be written off. In the past, 4.5% of the balance of the remaining accounts receivable has been the basis of an estimate for the required balance in the allowance for doubtful accounts. Management feels that this estimate should be followed for 2020 and requires you to make the necessary adjustment.

2.After doing a count of supplies on hand, management determined that $1,400 of supplies remained unused at December 31, 2020.

3.The account balance in Prepaid Insurance of $14,000 represents the twelve-month insurance policy renewal cost for 2020/21. The policy's coverage started April 1, 2020.

4.FV-NI Investments are short-term investments. The fair value of the portfolio of investments was $22,500 at December 31, 2020.

5.In January 2020, some old equipment was sold for proceeds of $385 cash. The entry made by the bookkeeper was debit Cash, credit Gain on Disposal of Equipment. The original cost of the equipment was $14,300 and the accumulated depreciation was $14,200 up to the date of sale.

6.The depreciation expense for the remaining equipment was calculated to be $17,200 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.Unpaid salaries and wages at December 31, 2020, totaled $1,790. These will be paid as part of the first payroll of 2021.

9.After some analysis, management informs the accountant that the Unearned Revenue account should have a balance of $35,000.

10.Jasper is being sued by one of its former clients for $100,000 for giving bad advice and instructions. Upon discussion with legal counsel, it has been agreed that it will likely take $45,000 to settle this dispute out of court. The settlement is expected to occur in late 2021. No entry has yet been recorded.

11.The accountant is told that a sublet lease arrangement for some excess office space has been negotiated and signed. It will provide Jasper with rent revenue starting on February 1, 2021, at a rate of $400 per month.

12.The bank loan is due in three years with no principal to be repaid in the short-term. The last payment took place on December 31, so there is no accrual required for interest

13.Jasper 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. After recording all of the necessary adjustments and posting to the general ledger, the accountant prepared the tax returns, and determined that a tax rate of 25% needed to be applied to the income before income tax amount. The necessary adjusting entry for taxes has not yet been recorded.