MarketFy Corp. delivers marketing consulting services. The company performs adjusting entries on a monthly basis, whereas closing entries are prepared annually at December 31. An unadjusted trial balance dated December 31, current year, follows.

Marketfy

Undjusted trial balance December 31st 2020

Cash 2.000

Accounts Receivable 5.000

Prepaid rent 2.000

Unexpired insurance policies 1.333

Office supplies 500

Office Equipment 150.000

Building 300.000

Acc depreciation Building 40.625

Acc Depreciation Office Equipment 20.313

Ac. Payable 1.000

Notes Payable due 3/1 year 2 120.000

Income tax payable 2.000

Unearned fees 2.500

Salaries payable 5.000

Interest payable 6.000

Capital stock 30.000

Retained Earnings 75.541

Dividends 20.000

Sales 1.100.000

Telephone expense 11.000

Office supply expense 25.000

Depreciation expense office equipment 17.188

Depreciation expense building 34.375

Rent expense 15.000

Insurance expense 7.983

Salary expense 800.000

Income tax expense 5.000

interest expense 6.600

Totals 1.402.979 1.402.979

By the end of December 2020, Xavier Dupree, chief accountant of MarketFy Corp is working to finish his accounting for the month. He realizes that he still needs to prepare the adjusting entries, and he has the following information:

1. Salaries earned by employees that have not yet been recorded or paid amount to 80,000.

2. Depreciation of the Office Equipment equipment is based on an estimated life of 10 years. The straight-line method is used. Depreciation of the Building is based on an estimated life of 40 years. The straight-line method is used.

3. The company signed an insurance contract by February 1st 2020 for one year, with a value of 8,000.

4. A 11-month note payable in the amount of 120,000 had been obtained with an interest computed at an annual rate of 6 percent on March 1st 2020. The entire 120,000, plus all of the interest accrued over the 14-month life of the loan, is due in full on February 1st of the upcoming year.

5.- Unrecorded Income Taxes Expense accrued in December amounts to 25% of Earnings before taxes (35241). This amount will not be paid until March 30.

6.- The company has just signed a new 30,000 contract for next year services with customer RPT corp, and collected a 20% of the amount.

7.- By December 31st the company has just sold the building for 300,000 cash.

Prepare adjusting entries on General Journal format.

Problem 2 (65%)

Prepare an after-adjusting entries trial balance. (25 points)

Prepare an income statement for the year ended December 31, current year. (20 points)

Prepare an after closing Balance Sheet. (10 points)

Briefly evaluate the companys profitability and liquidity. (10 points)