Using the worksheet, prepare the adjusted trial balance of Lady Ltd. at October 31, 2020. The unadjusted balances have been entered for you. Key each adjusting entry by letter.
2.	Prepare the income statement, the statement of retained earnings, and the classified balance sheet.
3.	a.	Compare the business's net income for October to the amount of dividends paid to the owners. Suppose this trend continues into November. What will be the effect on the business's financial position, as shown by its accounting equation?
	b.	Will the trend make it easier or more difficult for Lady to borrow money if the business gets in a bind and needs cash? Why?
	c.	Does either the current ratio or the cash position suggest the need for immediate borrowing? Explain.

Adjustment data at

October

31,

2020.

a.	Accrued service revenue at October 31, $1,600.
b.	Prepaid rent expired during the month. The unadjusted prepaid balance of $2,400 relates to the period October through December.
c.	Supplies used during October, $2,700.
d.	Depreciation on furniture for the month. The estimated useful life of the furniture is three years.
e.	Accrued salary expense at October 31 for Monday, Tuesday, and Wednesday. The five-day weekly payroll of $4,800 will be paid on Friday, November 2.

Lady Ltd.

Trial Balance Worksheet

October 31, 2020

		Trial Balance		Adjustments
	Account	Debit	Credit		Debit		Credit
	Cash	8,400
	Accounts receivable	10,000
	Accrued service revenue
	Prepaid rent	2,400
	Supplies	2,700
	Furniture	37,800
	Accumulated depreciation		3,500
	Accounts payable		11,000
	Salary payable
	Share capital		23,000
	Retained earnings		12,300
	Dividends	4,400
	Service revenue		20,000
	Salary expense	3,000
	Rent expense
	Utilities expense	1,100
	Depreciation expense
	Supplies expense
	Total	69,800	69,800