Reference no: EM132493676

The December 31, 2019, trial balance of Highlighter Inc. included the following selected accounts:

Accounts receivable $176,000

Unearned service revenue 24,000

Prepaid insurance 36,000

Equipment 280,000

Accumulated depreciation-equipment 30,000

Salary expense 130,000

Additional data:

• One-third of the revenue received in advance (unearned service revenue) has been earned by December 31, 2019.

1. The prepaid insurance represents the annual premium on a policy providing coverage starting September 1, 2019. No insurance expense has been recorded to date.
2. Since the last payday, employees have earned an additional $2,500 which has not yet been paid or recorded.
3. The equipment has an estimated life of 10 years and no expected value at the end of its life.
4. Services performed but un-billed and uncollected at year end amount to $6,500.

Required

Question 1: Prepare the necessary year-end adjusting entries as of December 31, 2019. Show all calculations, if any.