Question 1 Chan Audio Company is retailer of stereo equipment that began operation on January 1, 2019. One month later, on January 31, 2006, the company unadjusted trial balance consists of the following accounts: Chan Audio Company Unadjusted trial balance January 31, 2019 Unadjusted TB Debit Credit Cash 71,700 Account receivable 160,300 Note receivable 40,000 Inventory 250,200 Prepaid rent 15,000 Store equipment 114,900 Note payable 100,000 Account payable 117,100 Unearned rent revenue 3,000 Capital stock 400,000 Sale revenue 160,000 selling expense 100,000 Wage expense 28.000 If the company wants to prepare monthly financial statements, it has to consider the following adjustments on January 31 (end of accounting period): a. January 1, Chan paid $15,000 of rent in advance to cover the first quarter of 2019, as shown by debit balance in the prepaid rent account b. Wages earned by employees during January but not paid as of January 31 were $3,750 c. Store equipment depreciation is calculated using straight-line method of depreciation. Salvage value of store equipment is estimated to be $18,900, and expected useful life of 8 years d. Chan borrowed from the bank $100,000 on January 1, 2019 as shown in Note payable account. Chan is to pay the principle and 9% interest 1 year later (January 1, 2020). Chan has not yet made the adjustment for the January interest expense e. On January 1, 2019, Chan made loan to a local supplier, as shown by the debit balance in Note receivable account. The note stated that the loan is to be repaid 1 year later (January 1, 2020), together with interest at 12% per annum. On January 31, 2019, an adjustment is needed to recognize interest earned on the note receivable. f. On January 15, a nearby company paid $3,000 cash to Chan as an advance rental for temporary use of Chan's storage space and equipment. The rental agreement covers the 3 months from January 15 to April 15. This $3,000 is the credit balance in the Unearned rent revenue account Required: 1. Prepare adjusting entries at January 31 2. Post the T-accounts (start the T-accounts with unadjusted trial balance given) 3. Prepare the adjusted trial balance 4. Prepare financial statements; income statement statement of retained earnings and balance sheet