(1) Prepare adjusting entries for the year ended December 31, 2021, based on the following data:

a. A two-year insurance policy costing $3,000 was purchased on September 30, 2021.
b. Employee salaries are owed for 3 days of a regular 5-day work week. Weekly payroll,
$8,000.
c. The balance in Supplies before adjustment is $1,600. A physical count reveals $350 of
supplies on hand on December 31, 2021.
d. Equipment was purchased at the beginning of the year for $20,000. The equipment has
a useful life of 4 years and no salvage value.
e. Unearned Service Revenue has a balance of $4,200 before adjustment. Records show
that $2,725 of that amount has been earned by December 31, 2021.

(2) The following selected accounts appeared in the unadjusted trial balance of Hawthorne Industries:
Accounts receivable $176,000
Prepaid rent 69,000
Prepaid insurance 36,000
Equipment 280,000
Accumulated depreciation-equipment 30,000
Unearned service revenue 24,000
Salary expense 130,000
Additional data:
a. One-half of the revenue received in advance has been earned by December 31, 2021.
b. The prepaid insurance represents three years’ premium on a policy providing coverage starting
September 1, 2021.
c. Since the last payday, employees have earned an additional $2,500 which has not yet been paid
or recorded.
d. The equipment has an estimated life of 10 years and no expected value at the end of its life.
e. Services performed but unbilled and uncollected at year end amount to $6,500.
f. The prepaid rent relates to one-half of a year beginning on October 1, 2021.

Prepare the necessary year-end adjusting entries as of December 31, 2021.

(3) The unadjusted trial balance and information regarding adjusting entries for Becky’s Carpets, Inc., is
given below. Prepare the Financial Statements for Becky’s Carpet Inc after making the necessary
adjustments.

Becky’s Carpets, Inc.

Unadjusted Trial Balance
December 31, 2021
Debit Credit
Cash $ 25,500
Accounts receivable 15,000
Supplies 4,500
Prepaid insurance 5,000
Equipment 89,000
Accumulated depreciation-equipment $ 6,000
Accounts payable 1,800
3,700
Common stock 93,200
Retained earnings 21,000
Service revenue 30,700
Salary expense 15,700
Advertising expense 1,700
$156,400
$156,400

Adjusting entry information:

a. Salaries earned but unpaid at the end of the year, $1,500
b. Insurance expired, $700
c. Depreciation expense, $800
d. Unearned service revenue earned during the year, $1,500
e. The Inventory of supplies at year end was $3,400
(4) Galarus Company had the following trial balance as of December 31, 2021:
Galarus Company
Trial Balance
December 31, 2021
Debit Credit
Cash $ 10,600
Accounts receivable 13,200
Supplies 2,400
Prepaid insurance 1,500
Equipment 38,500
Accumulated depreciation-equipment $ 8,300
Accounts payable 2,500
Unearned service revenue 8,900
Common stock 15,000
Retained earnings 10,100
Service revenue 35,000
Salary expense 11,200
Postage expense 2,400
$ 79,800 $ 79,800
Additional information:
a. Supplies used during the month, $450.
b. Prepaid insurance expired during the month, $300.
c. Depreciation on equipment for the month, $550.
d. Unearned service revenue earned during the month, $2,200.
e. Accrued salary expense at the end of the month, $650.
Based on the trial balance and the additional data, prepare financial statements for the year
ended December 31, 2021.