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Problem
The following unadjusted and adjusted trial balances are available for Interior Designs, Inc., as of and for the fiscal year ended December 31, 20X7.
Debit
Credit
Cash ........................................................... $20,000
$20,000
Accounts receivable ............................
11,000
19,500
Prepaid insurance....................................
4,400
4,000
Office supplies ..............................
7,000
6,000
Prepaid rent ..............................................
5,500
Equipment................................................ 120,000
120,000
Accumulated depreciation ..................
$22,000
$23,000
Interest payable........................................
500
600
Accounts payable ...................................
13,500
Income tax payable .....................
2,000
3,000
Salaries payable........................................
0
Unearned professional fees revenue .
15,000
14,000
Notes payable (due 20X9) ..........
20,000
Common stock ........................................
40,000
Retained earnings....................................
50,200
Dividends ...................................................
9,000
Professional fees revenue......................
86,000
95,500
Interest expense ...........................
1,100
1,200
Salaries expense .........................
25,000
28,000
Insurance expense ........................
4,800
Rent expense...........................................
11,500
Depreciation expense ................
12,000
Income tax expense.................................
5,600
6,600
Supplies expense ..........................
Utilities expense ......................
7.700
Totals ...................................................... $249 200
$249 200
$282.821
$2.62 800
a) Prepare the adjusting entries that must have been made.
b) Prepare the income statement and the statement of retained earnings for the fiscal year ended December 31, 20X7, as well as a statement of financial position as of December 31, 20X7.
c) Prepare closing entries.
d) Prepare a retained earnings general ledger '1" account showing the January 1, 20X7, balance, the effect of the closing entries, and the December 31, 20X7, balance.
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