The unadjusted trial balance of Royals Ltd. at December 31, 2020, appears in the solution step below. The adjustment data at December 31, 2020, is provided. i (Click the icon to view the month-end adjustment data.) Requirements ... Requirement 1. Using the worksheet, prepare the adjusted trial balance of Royals Ltd. at December 31, 2020. The unadjusted balances have been entered for you. Key each adjusting entry by letter. Calculate the adjusted balance of each account, and then total the debit and credit columns in the adjusted trial balance. (Leave unused cells blank. Round your answers to the nearest whole number.) Adjustment data at December 31, 2020. a. Accrued service revenue at December 31, $1,700. b. Prepaid rent expired during the month. The unadjusted prepaid balance of $2,400 relates to the period December through February. c. Supplies used during December, $2,400. d. Depreciation on furniture for the month. The estimated useful life of the furniture is three years. e. Accrued salary expense at December 31 for Monday, Tuesday, and Wednesday. The five-day weekly payroll of $4,900 will be paid on Friday, January 2. Royals Ltd. Trial Balance Worksheet December 31, 2020 Trial Balance Adjustments Account Debit Credit Debit Credit Debit Adjusted Trial Balance Credit Cash 9,400 Accounts receivable 17,000 Accrued service revenue Prepaid rent 2,400 Supplies 2,400 Furniture 37,800 Accumulated depreciation 3,000 11,000 Accounts payable Salary payable Share capital 28,000 Retained earnings 17,600 Dividends 4,500 Service revenue 18,000 Salary expense 2,900 Rent expense Utilities expense 1,200 Utilities expense Depreciation expense Supplies expense Total 1,200 77,600 77,600 equirement 2. Prepare the monthly income statement, the statement of retained earnings, and the classified balance sheet. egin by preparing the income statement. (Use parentheses or a minus sign for a net loss.) Revenues: Expenses: Total expenses Net income (loss) Now prepare the statement of retained earnings. (Complete all answer boxes. Use a minus sign or parentheses for numbers to be subtracted.) Add: |Less: Prepare the heading and asset, liability, and shareholders' equity portions of the balance sheet. (Use a minus sign or parentheses for numbers to be subtracted. Abbreviations used: Acc. dep. = Accumulated depreciation.) Assets Liabilities Current assets: Current liabilities: Total current assets Total current liabilities Shareholders' Equity Current assets: Total current assets Less: Total assets Assets Current liabilities: Liabilities Total current liabilities Shareholders' Equity Total shareholders' equity Total liabilities and shareholders' equity a. Compare the business's net income for December to the amount of dividends paid to the owners. Suppose this trend continues into January. What will be the effect on the business's financial position, as shown by its accounting equation? Royals net income dividends for the month. Continuation of this trend will both the assets and the shareholders' equity (retained earnings) of the business. b. Will the trend make it easier or more difficult for Royals to borrow money if the business gets in a bind and needs cash? Why? This trend will make it because more and more will be available for the business to pay debts as they come due. c. Does either the current ratio or the cash position suggest the need for immediate borrowing? Explain. (Round the current ratio to two decimal places, X.XX.) The current ratio is with a ratio of With a cash position of $ Royals that the business will need to borrow. cover all the current liabilities.