The Smith brothers started its software company on Jan. 1, 2021. Assume that Smith has an annual accounting cycle from Jan. 1 to Dec. 31 and adjusting entries are prepared on Dec. 31 each year. The following transactions took place during fiscal 2021 (Jan. 1 to Dec. 31, 2021). 1. Jan. 1: Smith issued $25,000 of common stock. Smith also took a bank loan of $25,000 at 5% per annum (simple interest). The entire principal amount is due in two years, i.e., on Jan. 1, 2023. 2. Jan. 1: Smith paid $12,000 cash to purchase an equipment. The equipment has an estimated useful life of 10 years and an estimated salvage value of $2,000. 3. Jan. 1: Smith paid $4,000 cash for two years of insurance coverage starting on Jan. 1, 2021. 4. Feb 1: Smith rented a building and paid $3,600 for one year's rent (starting 2/1). 5. March 1: Smith purchased $4,600 of inventory on account. 6. June 1: Smith sold $20,000 of software on account. The cost is $4,000. 7. Sept. 1: Smith collected $6,000 cash from its customers for the previous sales on account. 8. Oct 31: Smith paid $3,600 cash for employee wages earned during the first ten months (Jan 1 to October 31, $360 per month). 9. Nov. 1: Smith paid $2,300 cash to suppliers for inventory purchases made on account. 10. Dec 1: Smith started an on-line service where customers pay an annual subscription fee when they sign up for a 12-month service plan. On Dec. 1, Smith received $4,800 of cash from customers for one year of subscription fees (for online services from Dec. 1, 2021 to Nov. 30, 2022). Additional information: Smith uses the straight-line depreciation method. Two months of employee wages was accrued on Dec. 31, 2021. Smith plans to pay their employees on Jan. 1, 2022. Interest on the bank loan is paid annually on Jan. 1 (i.e., the first interest payment is due on Jan. 1, 2022). Don't forget to do other necessary adjusting entries. (Hint: There are six adjusting entries in total.) Required: 1. Complete the 3-step process discussed in class (see LN1): a. Use the FSET template posted on Canvas to record the transactions and adjusting entries for fiscal 2021. b. Record the journal entries, including adjusting entries and closing entries. c. Post all entries to the corresponding T-accounts (use the template posted on Canvas). 2. Prepare a Balance Sheet and an Income Statement for fiscal 2021. Don't forget to do closing entries before you prepare the financial statements