QUESTION 3 (34 marks; 53 minutes) Preparation of journal entries and financial statements Mitka Inc. reported the following accounts and balances in its unadjusted trial balance as at December 31, 2019. Note that the accounts are listed in alphabetic order. Accounts payable Accounts receivable Accumulated depreciation - Equipment Cash Cost of sales Deferred sales revenue Dividends declared Equipment, at cost Interest expense Merchandise inventory Note payable, due June 1, 2021 Operating expenses $ 57,000 52,600 12,000 168,000 205,000 10,000 20,000 60,000 600 17,000 30,000 163,000 Merchandise inventory Note payable, due June 1, 2021 Operating expenses Prepaid expenses Retained earnings, Jan. 1, 2019 Sales revenue Contributed capital (990 common shares) Supplies on hand 17,000 30,000 163,000 4,800 43,000 450,000 99,000 10,000 All of the above accounts have normal debit and credit balances, as defined in the textbook. Additional information: a) Management estimates that 20 percent of the balance in Deferred sales revenue had actually been earned by December 31, 2019. Assume that the normal gross profit is 60% of the sales revenue. b) The balance in Prepaid expenses represents the premium for a one-year insurance policy, effective December 1, 2019. c) Mitka Inc. acquired the equipment on January 1, 2017. Depreciation expense for 2019 was determined to be $6,000. d) A count of supplies as at December 31, 2019 showed that the cost of supplies that remained in stock was $2,000. e) Interest on the note payable is 4 percent per year, payable monthly at the beginning of the following month. Interest was last paid on December 1, 2019 and was recorded properly at that time. The company signed the note on June 1, 2019. ) The company is subject to a 40% income tax rate. No amount has yet been recorded for income taxes in 2019. g) The company issued 90 shares throughout the year 2019. Required: 1. Prepare in good form any necessary adjusting journal entries as at December 31, 2019 for events (a) to (g) above. You may omit narrative explanations, but be sure show all calculations. Also, use Operating expenses in your journal entries for items (b), (c) and (d). This will save you time and space when you prepare the statement of earnings for requirement 2 below. (10 marks)