You are handed the following unadjusted trial balance:

Champion Professional Services

Unadjusted trial balance

December 31, 20X7

DebitCreditCash25,000Accounts receivable-0-Supplies3,800Prepaid insurance9,800Prepaid rent500Equipment60,000Accumulated depreciationEquipment22,900Accounts payable6,000Salaries payable-0-Unearned Fees4,000F. Mercury, Capital51,000F. Mercury, Withdrawals14,000Fees Earned71,900Depreciation ExpenseEquipment-0-Salaries Expense24,800Insurance Expense-0-Rent Expense5,500Supplies Expense-0-Advertising Expense6,000Utilities Expense 6,400_______Totals155,800155,800

Using the data below, complete the worksheet on the following page by filling in the adjustments and adjusted trial balancefor Champion for the year ended December 31, 20X7.

a. 8 employees are paid weekly. At year end, 3 days wages have accrued at $120 a day for each employee.

b. A physical count shows $600 of office supplies on hand at year end.

c. $2,600 of prepaid insurance coverage has expired.

d. Annual depreciation on the equipment is $8,450.

e. On November 1, Champion contracted for a new job for which it is paid $1,000 a month. It received a 4-month advance and booked it as unearned fees.

f. A client renewed its contract for 3 months at $1,300 a month, starting on November 1. The first payment is due on February 28^th.

g. The balance in Prepaid Rent is Decembers rent.

Champion Professional Services

Trial balance

December 31, 20X7

Unadjusted trial balance

Adjustments

Adjusted trial balanceDrCrDrCrDrCrCash25,000Accounts Receivable-0-26002600Supplies3,8003200600Prepaid Insurance9,80026007200Prepaid Rent500500Equipment60,00060000Acc. DepreciationEquipment22,900845031350Accounts Payable6,0006000Salaries Payable-0-28802880Unearned Fees4,00020002000F. Mercury, Capital51,00051000F. Mercury, Withdrawals14,00014000Fees Earned71,900460076500Depreciation Exp.Equipment-0-84508450Salaries Expense24,800288027680Insurance Expense-0-26002600Rent Expense5,5005006000Supplies Expense-0-32003200Advertising Expense6,0006000Utilities Expense 6,4006400Total155,800155,8002223022230169730169730

4. Using the adjusted trial balance from Problem 3, complete the Income Statement and Balance Sheet columns of the worksheet for Champion. When the worksheet is complete, prepare Champions financial statements.

Champion Professional Services. Worksheet

December 31, 20X7

Adjusted trial balanceIncome statementBalance sheetDrCrDrCrDrCrCashAccounts ReceivableSuppliesPrepaid InsurancePrepaid RentEquipmentAcc. DepreciationEquipmentAccounts PayableSalaries PayableUnearned FeesF. Mercury, CapitalF. Mercury, WithdrawalsFees EarnedDepreciation ExpenseEquipmentSalaries ExpenseInsurance ExpenseRent ExpenseSupplies ExpenseAdvertising ExpenseUtilities Expense