Some clients pay in advance for services; others are billed after services have been performed. Advance payments are credited to an account entitled Unearned Agency Fees. Adjusting entries are performed on a monthly basis. Closing entries are performed annually on 31 December.

Below is Legends Unadjusted Trial Balance at the year ended 31 December 2020.

Account Title	Debit $	Credit $
Cash	14,815
Accounts receivable	35,300
Prepaid rent	1,200
Unexpired insurance	375
Office supplies	900
Office equipment	15,000
Accumulated depreciation: office equipment		12,000
Accounts payable		1,500
Notes payable		6,000
Unearned agency fees		8,000
Income tax payable		3,200
Share capital (2,000 Ordinary Share with nominal value of $10 each)		20,000
Retained earnings		10,800
Dividends	800
Agency fees revenue		46,500
Depreciation expense: office equipment	2,750
Office supplies expense	1,130
Telephone expense	480
Salaries expense	24,640
Rent expense	6,100
Insurance expense	1,175
Other expenses	90
Interest expense	45
Income tax expense	3,200
	108,000	108,000

The following events have not yet adjusted to the above Unadjusted Trial Balance:

1. Beauty pays rent quarterly in advance. The most recent advance payment of $1,800 was made on 1 November 2020. The next rent payment of $1,800 will be made on 1 February 2021.

2. An agency service amounting to $500 had been provided on 31 December 2020 to a client but was unrecorded and uncollected.

3. The service for the amount of $2,500 rendered to a customer who had paid in advance was completed on 31 December 2020. No record was made upon the performance of the service.

4. Office supplies on hand as at 31 December 2020 amount to $530.

5. Office equipment is being depreciated with straight-line method over 5 years on its original cost.

6. Beauty estimates that income taxes expense for the entire year is $3,900. The full amount is due in early 2021.

7. On 31 December 2020, Beauty declared a cash dividend of $0.15 per share and to be paid next year.

8. Beauty signed an agreement with Cathay Asia Airline on 30 December 2020 for the provision of 3-months agency service commencing March next year. The agreement specifies that Cathay Asia Airline has to pay a minimum monthly fee of $6,000 with effect from 1 March 2021.

Required:

1. Prepare the necessary adjusting journal entries at 31 December 2020 so as to bring the accounting records of Legend up-to-date. If any of the above events does not require adjusting entries, write down "no entry" and name the relevant accounting principle to support your answer. (18 marks)

2. Prepare the income statement of Beauty for the year ended 31 December 2020 in proper format, i.e. classifying the items under the captions of Revenues, Expenses, Profit before taxes and Profit after taxes. (7 marks)

3. Prepare the statement of financial position of Beauty as at 31 December 2020 in proper format, i.e. classifying the items under the captions of Assets, Liabilities, and Shareholders Equity.

4. Record the relevant year-end closing journal entries.

5. Prepare the After-closing Trial Balance as at 31 December 2020.