OLU 5 IULIS. 1) Prepaid professional liability insurance was purchased for $3,200 on December 1, 20X1, and provides insurance coverage from December 1, 20X1, through March 31, 20X2 2) Prepaid rent was paid on December 1, 20X1, in the amount of $30,000 for the six- month period December 1, 20X1, through May 31, 20X2. 3) Equipment was purchased on December 1, 20X1, for $100,000 which is being depreciated monthly based on an estimated life of 8 years. The estimated salvage value of the equipment is $4,000 and straight line depreciation is used. 4) On December 1, 20X1, $80,000 was borrowed and recorded as a long-term note payable at an annual interest rate of 6%. Interest is due every three months, beginning February 28, 20X2. 5) On January 2, 20X2, $20,000 was borrowed and recorded as a long-term note payable at an annual rate of 6%. The principal will be paid on January 2, 20X4. Interest will be paid monthly on the first of each month beginning February 1, 20X2 6) Recognized as client service revenue for client services performed during January $17,000 that had previously been recorded upon receipt in advance as unearned client service revenue. 7) A count showed $5,000 worth of office supplies on hand on January 31, 20X2. 8) Income tax expense is accrued for January 20X2 based on 40% of net income before taxes for January 20X2, not paid until a later month in 20X2. (Be sure to consider the effect of adjusting entries just made (1 through 7) on revenue and expense balances in determining net income before taxes. You may wish to complete part "e" of the problem below through adjusting entry #7 first in order to establish adjusted revenue and expense balances before calculation of income tax at 40%.)