Ka Ho Limited provides repair and maintenance services. The annual reporting period ends 31 December. The unadjusted trial balance on 31 December 2020 are as follows:

Ka Ho Limited
Unadjusted Trial Balance on 31 December 2020
	Debit	Credit
	$	$
Cash	1,000,000
Accounts receivable	60,000
Supplies	5,000
Equipment	30,000
Accumulated depreciation on equipment		3,000
Prepaid rent expense	60,000
Notes payable		30,000
Service revenue		500,000
Accounts payable		40,000
Wages expense	10,000
Rent expense	20,000
Supplies expense	1,000
Unearned revenue		12,000
Investment	20,000
Common stock (8,000 shares, $0.5 par value)		4,000
Additional paid-in capital		80,000
Retained earnings		537,000
Totals	1,206,000	1,206,000

Additional information:

1.	Ka Ho Limited had signed notes payable of $20,000 on 1 July 2020. The interest and principal of the notes payable will be due on 31 June 2021. Interest rate is 5% per annum. $10,000 of accounts payable had mistakenly been recorded in notes payable. There is no repayment in 2020 for the notes payable.
2.	Prepaid rent expense of $60,000 was recorded on 30 September 2020 for the rent covering the period from 1 October 2020 to 30 September 2021.
3.	Depreciation for the year on the equipment was $1,000.
4.	Supplies on hand amounted to $2,000 at the end of 2020.
5.	$12,000 were recorded in service revenue for repair and maintenance services to be performed in January 2021.
6.	Unearned revenue of $24,000 had mistakenly been recorded in accounts payable.
7.	Except for additional information 5, all unearned revenues on the record were for monthly repair and maintenance services covering the period from 1 Oct 2020 to 30 September 2021.
8.	At the end of 2020, employees earned wages of $3,000, which will be paid on the next payroll date in January 2021.

Required:

a.	Prepare journal entries to adjust the accounting records for additional information 1 8.
b.	Prepare income statement for the year ended 31 December 2020.