You have just joined Queenie Limited, which is a small merchandising company, as an accountant. Queenie Limited was set up on January 1, 2020. You have recently asked the bookkeeper to prepare the draft of the financial statements for the first year of operations ended December 31, 2020 for your review. The bookkeeper said that she only knew how to prepare a trial balance and below was the trial balance submitted by the bookkeeper. Queenie Limited Trial Balance December 31, 2020 CR s DR $ 280,950 102,000 30,750 Truck Office equipment Cash Share capital Sales revenue received Salaries paid Utilities paid Rent paid Insurance paid 240,000 577,080 181,500 12,000 195,000 14,880 817,080 817,080 In discussing the trial balance with the bookkeeper, you asked whether adjusting entries have been prepared to get the accounts up to date for the trial balance. The bookkeeper said that there was no need to make adjusting entries as Queenie Limited was a small company. Required: a. Explain why the accountant suspected that the accounts had not been adjusted prior to the preparation of the trial balance. (3 marks) b. Explain to the bookkeeper the importance of adjusting entries and the potential misstatements that can result from their exclusion. (7 marks)