PC: 6 Answer: a), b), and c) income statement only.

For requirement c), do NOT prepare a statement of financial position and do NOT prepare a statement of retained earnings.

PEndix C THE Accounting Information System PC.6 Excel The trial balance and other information for consulting engineers Mustang Rovers Consulting Limited follow: Rent expense Mustang Rovers Consulting Limited Trial Balance December 31, 2020 , Debit Credit Cash $ 83.700 Accounts receivable 81.100 Allowance for doubtful accounts $ 750) Supplies 1,960 Equipment 85,000 Accumulated depreciation-equipment 6.250 Notes payable 7,200 Common shares 35,010 Retained earnings 161,100 Service revenue 100,000 9,750 Salaries and wages expense 28,500 Insurance expense 18,500 Utilities expense 1,080 Miscellaneous expense 720 $310,310 $310,310 Additional information: 1. Service revenue includes fees received in advance from clients of S6,900. 2. Services performed for clients that were not recorded by December 31 totalled $7,300. 3. Bad debt expense for the year is $6,300. 4. Insurance expense includes a premium paid on December 31 in the amount of $6,000 for the period starting on January 1, 2021. 5. Equipment is depreciated on a straight-line basis over 10 years. Residual value is $15,000 6. Mustang gave the bank a 90-day, 12% note for $7,200 on December 1, 2020. 7. Rent is $750 per month. The rent for 2020 and for January 2021 has been paid. 8. Salaries and wages earned but unpaid at December 31, 2020, are $2,598. 9. Dividends of $80,000 were declared on December 15, 2020 for payment on February 1, 2021. INstructions a. From the trial balance and other information given, prepare annual adjusting entries as at Decem- ber 31, 2020. Round amounts to the nearest dollar. b. Prepare an adjusted trial balance for Mustang Rovers as at December 31, 2020. c. Prepare an income statement for 2020, a statement of financial position as at December 31, 2020, and a statement of retained earnings for 2020. d. Explain how the financial statements in part (c) would change if Mustang Rovers operated as a sole proprietorship, rather than a corporate ownership structure. PC.7 The following information relates to Joachim Anderson, Property Manager, at the close of the fiscal year ending December 31: 1. Joachim paid a storage locker facility $335 for next January's rent on a locker and charged it to Rent Expense. 2. On November 1, Joachim signed a three-month, 10% note to borrow $15,000 from Yorkville Bank. 3. The following salaries and wages are due and unpaid at December 31: sales, $1,420; office clerks, $1,060. 4. Interest of $500 has accrued to date on a note that Joachim holds from Grant Muldaur. 5. The estimated loss on bad debts for the period is $1,560. 6. Stamps and stationery are charged to the Office Expense account when purchased; $110 of these supplies remain on hand