Question #2. (30 marks) The following information relates to Fugitive Electronics on December 31, 2016. The company, which uses the calendar year as its fiscal period, initially records prepaid and unearned items in B/S accounts (assets and liabilities, respectively).- a. C. The company's weekly payroll is $8,750, paid each Friday for a five-day workweek. Assume December 31, 2016, falls on a Monday, but the employees will not be paid their wages until Friday, January 4, 2017. b. Eighteen months earlier, on July 1, 2015, Fugitive purchased equipment that cost $20,000. Useful life is 5 years, with no salvage value. ST-Line depreciation applies. On October 1, 2016, Fugitive agreed to work on a new housing development. The company is paid $120,000 on October 1 in advance of future installation of similar alarm systems in 24 new homes. That amount was credited to the Unearned Revenue account. Between October 1 and December 31, work on 20 homes was completed. d. On September 1, 2016, Fugitive purchased a 12-month insurance policy for $1,800. The amount was debited to the Prepaid Insurance account. 4 e. On December 29, 2016, Fugitive completed a $7,000 service that has not been billed or recorded as of December 31, 2016. Required: 1. Prepare any necessary adjusting entries on December 31, 2016, in relation to transactions and events a through e. 10 marks Transaction (a) is done for you as an illustration. (a) Dec 31 Wages Expense 1,750 Wages Payable 1,750- Accrue wages for last day of the year: ($8,750 * 1/5 = $1,750) 2. Complete the following table and determine the amounts and effects of your adjusting entries on the year 2016 1/S and the December 31, 2016, B/S. Use U for up and D for down to indicate increase and decrease, respectively in the Effects column. 20 marks NI = net income; TA = total assets; TL = total liability; TE = total equity e Entry Amount $ 1,750 Effect on Ne $1,750 DA Effect on TA No effect Effect on TL $ 1,750 U Effect on TE $ 1,750 DA a 13 3 le e e la Transaction (a) is done for you as an illustration