Part B T Howe Corporation adjusts its account monthly and closes its accounts annually. The following is unadjusted trial balance of T Howe Corporation on 31 December 20X1: Debit Credit S $ 6,723 190 18,910 38,000 45,000 23,500 100,000 280 Cash Prepaid office expense Accounts receivable Supplies Equipment Accumulated depreciation - equipment Building Rent payable Accounts payable Income tax payable Shares capital Retained earnings Dividends Revenue earned Salaries expense Rental expense Office expense Supplies expense Depreciation expense Income tax expense 10,804 1,500 100,000 33,256 4,000 90,000 18,310 4,515 2,832 11,860 7,500 1,500 259,340 259,340 Adjusting items: 1. Supplies on hand on 31 December 20X1 amounted to $36,000. 2. The company received $3,000 cash in advance for provision of service in February 20X2. No entries have been made. 3. All equipment was purchased when the Company formed. The estimated useful life is 5 years. No adjusting entries have been made for November and December, 20X1. 4. The auditor estimated that the income tax expense for the entire year was $1,896, which to be paid next year. Required: a) Prepare Journal entries for adjusting items. Debit $ Credit $ 1. 2. 3. 4. b) Prepare Income Statement for the year ended 31 December 20X1, and Statement of Financial Position as at that date. T Howe Corporation Income Statement For the year ended 31 December 20X1 $ $ T Howe Corporation Statement of Financial Position 31 December 20X1 Assets $ S Liabilities Shareholders' Equity c) Close the revenue and the expense accounts Debit S Credit $ 1. 2. 3