Nazari Electrical Services has an August 31 fiscal year end. The company's trial balance prior to adjustments follows:

Prepare adjusting entries, adjusted trial balance, financial statements, and closing entries.

NAZARI ELECTRICAL SERVICESTrial BalanceAugust 31, 2021

Debit

Credit

Cash

$13,870

Supplies

23,400

Debt investments

18,000

Equipment

108,000

Accumulated depreciationequipment

$38,250

Vehicles

98,000

Accumulated depreciationvehicles

42,875

Accounts payable

7,115

Unearned revenue

4,500

Notes payable

48,000

A. Nazari, capital

68,175

A. Nazari, drawings

32,400

Service revenue

180,115

Interest revenue

360

Repairs expense

25,235

Insurance expense

8,550

Interest expense

2,535

Rent expense

18,900

Salaries expense

40,500

$389,390

$389,390

Additional information:

The equipment has an expected useful life of 12 years. The vehicles' expected useful life is eight years.

A physical count showed $1,500 of supplies on hand at August 31, 2021.

As at August 31, 2021, there was $2,500 of revenue received in advance and the related services have not yet been performed.

Nazari Electrical Services has an investment in bonds that it intends to hold to earn interest until the bonds mature in 10 years. The bonds have an interest rate of 4% and pay interest on March 1 and September 1 each year.

Accrued salaries payable at August 31, 2021, were $1,850.

Interest on the 5% note payable is payable at the end of each month and $8,000 of the principal must be paid on December 31 each year. Interest payments are up to date as at August 31, 2021.

The owner, A. Nazari, invested $3,000 cash in the business on December 29, 2020. (Note: This has been correctly recorded.)

Instructions

a. Prepare the adjusting entries and an adjusted trial balance.

b. Calculate profit or loss for the year.

c. Prepare a statement of owner's equity and a classified balance sheet.

d. Prepare the closing entries. Using T accounts, post to the Income Summary, and Owner's Drawings and Owner's Capital accounts. Compare the ending balance in the Owner's Capital account with the information in the statement of owner's equity.