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Allan Thorpe founded Alcazar Sales Company

The accounting records consist of the following T-accounts in the ledger with the following closing balances as at December 31, 2019

Account	Debit $	Credit $
Cash	5,800
Accounts receivable	12,300
Prepaid rent	2,800
Supplies	2,600
Equipment	52,000
Accumulated depreciation-equipment
Accounts payable		18,500
Salary payable
Unearned service revenue		4,100
Allan Thorpe, capital		40,000
Allan Thorpe, drawing	50,000
Service revenue		80,700
Salary expense	17,000
Depreciation expense
Advertising expense
Utilities expense
Supplies expense
Rent expense

Allan indicates that, at year-end, customers owe him $1,000 accrued service revenue, which he expects to collect early next year. These revenues have not been recorded. During the year, he collected $4,100 service revenue in advance from customers, but the business has earned only $800 of that amount. During the year he has incurred $2,400 of advertising expense, but he has not yet paid for it. In addition, he has used up $2,100 of the supplies. Allan determines that depreciation on equipment was $7,000 for the year. At December 31, he owes his employee $1,200 accrued salary. The rent paid in advance on Jan 2 for $2,800 relates to the period January 2019 through to February 2020. The owner made no capital investments during the year.

Allan expresses concern that drawing during the year might have exceeded the businesss net income. To get a loan to expand the business, Allan must show the bank that the businesss owners equity has grown from its original $40,000 balance.

Requirement:

Question 1

1. Prepare the journal entries for the transactions that were not previously recorded, prepare and update the T-accounts and determine the ending balance on all accounts used by the company.

2. Prepare the adjusted trial balance for the company.

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