Question 2 (20 marks) The following information relates to the December 31 year-end of Cosmic Corporation:

(a) The office supplies account had a $400 debit balance as at January 1. During the year office supplies were purchased in the amount of $1,150. At December 31, a physical count indicated that $250 of office supplies were on hand.

(b) On September 30, the company agreed to provide consulting services to a client and received an advance payment of $9,450. At December 31, two-thirds of the services had been performed.

(c) The company rents office space and on December 1 had paid $7,200 to the landlord for 12 months rent in advance.

(d) The company has two insurance policies. Policy #1 was purchased on July 1, at a cost of $3,420 for three years coverage and policy #2 was purchased on October 1 at a cost of $8,640 for two years coverage.

(e) On November 1, the company had borrowed $2,000 cash by signing a 90-day note with interest @ 6%.

(f) On January 1, the Allowance for Doubtful Accounts had a credit balance of $500. During the year, bad debts were written off in the amount $1,500. The total accounts receivable as at December 31 is $25,000 and the company estimates uncollectible accounts to be 3% of the outstanding receivables.

(g) The last payroll in December fell on the 28th of the month. The companys employees worked December 29th, 30th and 31st at a total cost of $400 per day.

(h) The company owns office equipment, which was purchased in the previous year at a cost of $15,000. The equipment has an estimated service life of 5 years and a salvage value of $5,000. The company has been using the straight-line method to record depreciation on this equipment.

(i) On March 1 of the current year, the company purchased a vehicle at a cost of $30,000. The vehicle has an estimated useful life of 8 years and salvage value of $1,000. The company has decided to use the declining-balance method at double the straight-line rate to record depreciation on this vehicle.

(Question 2) prepare the necessary year-end adjusting entries for Cosmic Corporation, based on the above information. Please show your calculations (Explanations are NOT required). (1 mark for each line item in the journal entries).