QUESTION 7 (47 marks) Below is the partial worksheet of Smith Optical Company, a company owned and operated solely by Donald Smith, for the month ended July 31, 2021. Smith Optical Company Work sheet (Partial) For the Month Ended July 31, 2021 Unadjusted Trial Adjusted Trial Accounts Balance Balance Debit Credit Debit Credit Cash 2,000 2,000 Prepaid Insurance 4,000 2,000 Office Supplies 1,000 600 Office Equipment 16,000 16,000 Accumulated Depreciation -Equip. 2.000 3,000 Accounts Payable 5,000 5,000 Salaries Payable 900 Unearned Service Revenue 4,500 2,500 Don Smith, Capital 7,450 7,450 Don Smith, Withdrawals 5,600 5,600 Service Revenue 13,350 15,350 Salaries Expense 3,700 4,600 Depreciation expense 1,000 Supplies expense 400 Insurance expense 2,000 Totals 32,300 32,300 34,200 34.200 The following are transactions that occurred at the end of the month, July 31, which needs adjusting entries. 1) Prepaid insurance used for the month, $2,000. 2) Owe employees' salaries for the month, $900 3) $2,000 of Unearned Service Revenue was realized/earned during the month. 4) Depreciation Expense on Office Equipment for the month, $1,000 5) At the end of the month, there were $600 of Office Supplies in the storeroom Required: a) Prepare the year-end adjusting entries to the respective accounts. (Explanation is not required) (10 marks) b) Prepare the following financial statements for Smith Optical Company for the month of July and label your statements accordingly. Marks will be deducted for missing '$" and title. i) Income Statement (6 marks) Statement of Owner's Equity (3 marks) Balance Sheet (in T-format) (15 marks) c) Prepare the closing entries for the month with explanation. (13 marks) END OF TEST