The trial balance and other information for consulting engineers Mustang Rovers Consulting Limited follow:

Mustang Rovers Consulting LimitedTrial BalanceDecember 31, 2023

Debit

Credit

Cash

$ 83,700

Accounts receivable

81,100

Allowance for doubtful accounts

$ 750

Supplies

1,960

Equipment

85,000

Accumulated depreciationequipment

6,250

Notes payable

7,200

Common shares

35,010

Retained earnings

161,100

Service revenue

100,000

Rent expense

9,750

Salaries and wages expense

28,500

Insurance expense

18,500

Utilities expense

1,080

Miscellaneous expense

720

$310,310

$310,310

Additional information:

Service revenue includes fees received in advance from clients of $6,900.

Services performed for clients that were not recorded by December 31 totalled $7,300.

Bad debt expense for the year is $6,300.

Insurance expense includes a premium paid on December 31 in the amount of $6,000 for the year starting on January 1, 2024.

Equipment is depreciated on a straight-line basis over 10 years. Residual value is $15,000.

Mustang gave the bank a 90-day, 12% note for $7,200 on December 1, 2023.

Rent is $750 per month. The rent for 2023 and for January 2024 has been paid.

Salaries and wages earned but unpaid at December 31, 2023, are $2,598.

Dividends of $80,000 were declared on December 15, 2023, for payment on February 1, 2024.

Instructions

From the trial balance and other information given, prepare annual adjusting entries as at December 31, 2023. Round amounts to the nearest dollar.

Prepare an adjusted trial balance for Mustang Rovers as at December 31, 2023.

Prepare an income statement for 2023, a statement of financial position as at December 31, 2023, and a statement of retained earnings for 2023.

Explain how the financial statements in part (c) would change if Mustang Rovers operated as a sole proprietorship, rather than a corporate ownership structure.