Q.1. Following is the unadjusted trial balance of Chenone Pakistan Limited for the year ended on December 31, 2020. Account Cash Debit Credit 8,000 Accounts Receivables 88,000 Allowance for Doubtful Accounts 200 Merchandize Inventory 121.400 Equipment 40,000 Acc. Depreciation of Equipment 13,600 Account Payable 11.000 Bank Loan Payable 16,000 Capital 57,100 Owner's withdraw 5.000 Sales 804,000 Sales Return & Allowances 4,800 Sales Discount 200 Purchases 471,500 Purchase Return & Allowances Purchase Discount 1,700 600 Transport In 5,400 Salary Expense Rent Expense 110,000 15,000 Insurance Expense Advertising Expense Utilities Expense Total 12,300 16,100 6.500 904,200 904.200 Adjustments a) Company uses a periodic inventory system. The ending inventory of merchandize is $91.000 b) A two-year fire insurance premium was paid on October 1, 2020. Insurance expense was debited for the entire amount $2,400 c) On October 1, 2020 the company paid $3,600 in advance for ads that were to appear six monthly issues of magazine, starting with October 1 2020. The entire amount was debited to Advertising Expenses. d) The bank loan payable was incurred on October 2, 2020, when a note bearing interest at 12% per annum was signed. Interest to be paid on January 30, 2021 (the due date of the note) e) It is expected that 4% of ending accounts receivable will prove to be uncollectible. Required 1. Prepare adjusting journal entries (Use proper format of General Journal) 2. Prepare an income statement, and a balance sheet as at 31.12.2020 Marks: 16