Subject 2 (25%) . ABC Hotels operates in the tourism industry. Assume that the trial-balance of ABC hotels, as of December 31,2020 is: ABC Hotels Trial Balance December 31, 2020 Debit Credit Cash ................................................................................................................................ 7,500 Accounts Receivable ................................................................................................6,500 Allowance for Doubtful Accounts .................................................................................... 550 Prepaid Insurance ................................................................................................ 4,500 Land ................................................................................................................................ 175,000 Buildings 60,000 Accumulated DepreciationBuildings ................................................................ 19,200 Equipment ....................................................................................................................... 75,000 Accumulated DepreciationEquipment ................................................................ 35,000 Share Capital .................................................................................................................... 200,000 Retained Earnings ................................................................................................ 41,000 Revenues from accommodation...................................................................................... 100,000 Revenues from renting hotel facilities ................................................................ 2,950 Revenues from restaurants ............................................................................................. 8,800 Utilities Expense ................................................................................................ 27,000 Salaries and Wages Expense ............................................................................................ 40,000 Maintenance and Repairs Expense ................................................................ 12,000 Totals ................................................................................................407,500 407,500 Required: 1. Based on the trial-balance and the information provided below, prepare adjusting entries and post them to the general ledger. (20%) a. The estimated useful life of the buildings is 40 years with insignificant residual value. The firm implements the straight-line depreciation method. b. The depreciation rate for equipment is 15% per year. The salvage value of the equipment is zero and the firm uses the straight-line depreciation method. c. During the year expired an insurance policy of 1,750. d. The amount of Revenues from renting hotel facilities present the amount received for 10 months for renting sporting facilities of the hotel to a local sporting club. The rents for November and December have not yet been received. e. It is estimated that 10% of the accounts receivable will not be collected. f. The expenses for salaries and wages for months November and December amount to 1,800. This amount will be paid during the fiscal period of 2021. g. The firm has received in advance from customers the amount of 4,450. The amount refers to accommodation services that will be provided to customers during the summer of 2021. The amount received was recorded as a revenue of the closing year. 2. Prepare adjusted trial balance. (2%) 3. Prepare closing entries and post them to the ledger. Additional information a. Assume that the amounts presented in the trial balance are already posted in the general ledger accounts. b. Firms tax rate is 20%. c. The fiscal year of ABC Hotels commences on January 1 and ends on December 31 of each year. . Explain relation between expenses recognition and assets recognition.