Zeek & Sunny operates a online recruitment agency called ZS recruiters.pk. Some clients pay in advance for services; others are billed after services have been performed. Advance payments are credited to an account entitled Unearned Agency Fees. Adjusting entries are performed on a monthly basis. Closing entries are performed annually on December 31. An unadjusted trial balance dated December 31, 2011, follows. (Bear in mind that adjusting entries have already been made for the first 11 months of 2011, but not for December.)

Zeek & Sunnay Recruiters

UNADJUSTED TRIAL BALANCE

DECEMBER 31, 2011

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,950

Fees receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,300

Prepaid rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200

Unexpired insurance policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375

Office supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900

Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000

Accumulated depreciation: office equipment . . . . . . . . . . . . . . . . . . . . $ 12,000

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500

Note payable (due 3/1/12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000

Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200

Unearned agency fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000

Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,800

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800

Agency fees earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,500

Telephone expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480

Office supply expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,130

Depreciation expense: office equipment . . . . . . . . . . . . . . . . . . . . . . . 2,750

Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100

Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,175

Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,640

Income taxes expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200

Total $108,000 $108,000

Other data related to adjusting entries follows

1. Office equipment is being depreciated over 60 months (5 years).

2. At December 31, 2011, $2,500 of previously unearned agency fees had been earned.

3. Accrued but unrecorded and unpaid salary expense totals $1,360 at December 31, 2011.

4. The agency pays rent quarterly (every three months). The most recent advance payment of $1,800

was made November 1, 2011. The next payment of $1,800 will be made on February 1, 2012.

5. Accrued but unrecorded and uncollected agency fees earned total $3,000 at December 31, 2011.

6. Office supplies on hand at December 31, 2011, total $530.

7. On September 1, 2011, the agency purchased a six-month insurance policy for $750.

8. On December 1, 2011, the agency borrowed $6,000 by signing a three-month, 9 percent note

payable. The entire amount borrowed, plus interest, is due March 1, 2012.

9. Accrued income taxes payable for the entire year ending December 31, 2011, total $3,900.

The full amount is due early in 2012.

Instructions

Prepare the necessary year-end closing entries.

Prepare an after-closing trial balance.