Question 3 (7 marks) Internet Consulting Service, Inc., adjusts its accounts every month. Given below is the company's year-end unadjusted trial balance dated December 31, 2011. (Bear in mind that adjusting entries already have been made for the first 11 months of 2011, but have not been made for December.) Internet Consulting Services Inc. Unadjusted Trial Balance for the month ended December 31, 2011 S.No. Accounts Titles Unadusted Trial Balance Debit Credit 1 Cash 49,100 2 Consulting fees receivable 23,400 3 Prepaid office rent 6,300 4 Prepaid dues and subscriptions 300 5 Supplies 600 6 Equipment 36,000 7 Accumulated depreciation: equipment 10,200 8 Notes payable 5,000 9 Income taxes payable 12,000 10 Unearned consulting fees 5,950 11 Gay Barred, Capital 62,700 12 Gay Barred, Drawings 60,000 13 Consulting fees earned 257,180 14 Salary Expense 88,820 15 Telephone expense 2,550 16 Rent Expense 22,000 17 Income tax expense 51,000 18 dues and subscriptions expense 560 19 Supplies expense 1,600 20 Depreciation expense: equipment 6,600 21 Miscellaneous expenses 4,200 TOTAL 353,030 353,030 1. On December 1, the company signed a new rental agreement and paid three months' rent in advance at a rate of $2,100 per month. This advance payment was debited to the Prepaid Office Rent account. 2. Dues and subscriptions expiring during December amounted to $50. 3. An estimate of supplies on hand was made at December 31; the estimated cost of the unused supplies was $450. 4. The useful life of the equipment has been estimated at five years (60 months) from date of acquisition. 5. Accrued interest on notes payable amounted to $100 at year-end. (Set up accounts for Interest Expense and for Interest Payable.) 6. Consulting services valued at $2,850 were rendered during December to clients who had made payment in advance. 7. It is the custom of the firm to bill clients only when consulting work is completed or, in the case of prolonged engagements, at monthly intervals. At December 31, consulting services valued at $11,000 had been rendered to clients but not yet billed. No advance payments had been received from these clients. 8. Salaries earned by employees but not paid as of December 31 amount to $1,700. 9. Income taxes expense for the year is estimated at $56,000. Of this amount, $51,000 has been recognized as expense in prior months, and $39,000 has been paid to tax authorities. The company plans to pay the $17,000 remainder of its income tax liability on January 15. Instructions a. Prepare the necessary adjusting journal entries on December 31, 2011. b. Determine the amounts to be reported in the company's year-end adjusted trial balance Internet Consulting Services Inc. Adjusting Entries for the month ended December 31, 2011 Date Particulars P/R Debit Credit Internet Consulting Services Inc. Unadjusted Trial Balance for the month ended December 31, 2011 S.No. Accounts Titles Unadusted Trial Balance Adjustments Adjusted Trial Balance Debit Credit Debit Credit Debit Credit 1 Cash 49,100 2 Consulting fees receivable 23,400 3 Prepaid office rent 6,300 4 Prepaid dues and subscriptions 300 5 Supplies 600 6 Equipment 36,000 7 Accumulated depreciation: equipment 10,200 8 Notes payable 5,000 9 Income taxes payable 12,000 10 Unearned consulting fees 5,950 11 Interest Payable - 12 Gay Barred, Capital 62,700 13 Gay Barred, Drawings 60,000 14 Consulting fees earned 257,180 15 Salary Expense 88,820 16 Telephone expense 2,550 17 Rent Expense 22,000 18 Income tax expense 51,000 19 dues and subscriptions expense 560 20 Supplies expense 1,600 21 Depreciation expense: equipment 6,600 22 Interest Expense - 23 Miscellaneous expenses 4,200 TOTAL 353,030 353,030