A six-column table for Daxu Consulting Company follows. The first two columns contain the unadjusted trial balance for the company as of December 31, 2002, and the last two columns contain the adjusted trial balance as of the same date.

 

Account	Unadjusted Trial Balance		Adjustments		Adusted Trial Balance		Â
Cash	$56,000	Â	Â	Â	$56,000	Â
Accounts Receivable	40,000	Â	Â	Â	47,500	Â
Office Supplies	35,000	Â	Â	Â	15,000	Â
Prepaid Insurance	7,600	Â	Â	Â	5,000	Â
Office Equipment	120,000	Â	Â	Â	120,000	Â
Accumulated Depr.-Office Equipment	Â	$25,000	Â	Â	Â	$35,000
Accounts Payable	Â	32,000	Â	Â	Â	40,000
Interest Payable	Â	-0-	Â	Â	Â	2,350
Salaries Payable	Â	-0-	Â	Â	Â	15,000
Unearned Consulting Fees	Â	26,000	Â	Â	Â	20,000
Long-Term Notes Payable	Â	60,000	Â	Â	Â	60,000
Common Stock	Â	30,000	Â	Â	Â	30,000
Retained Earnings	Â	46,000	Â	Â	Â	46,000
Consulting Fees Earned	Â	236,200	Â	Â	Â	249,700
Depr. Expense - Office Equip.	-0-	Â	Â	Â	10,000	Â
Salaries Expense	112,000	Â	Â	Â	127,000	Â
Interest Expense	7,600	Â	Â	Â	9,950	Â
Insurance Expense	-0-	Â	Â	Â	2,600	Â
Rent Expense	40,000	Â	Â	Â	40,000	Â
Office Supplies Expense	-0-	Â	Â	Â	20,000	Â
Advertising Expense	37,000	Â	Â	Â	45,000	Â
Totals	$455,200	$455,200	Â	Â	$498,050	$498,050

Required:

Analysis Component

 

1. Analyze the differences between the unadjusted and adjusted trial balances to determine the adjustments that must have been made. Show the results of your analysis by inserting these adjustment amounts in the table's two middle columns. Label each adjustment with a letter and provide a short description of it.

Preparation Component

 

1. Use the information in the adjusted trial balance to prepare this company's (a) income statement and statement of retained earnings for the year ended December 31, 2002 (Note: retained earnings at December 31, 2001 were $56,000, and the current-year dividends were $10,000), and (b) the balance sheet as of December 31, 2002.

    

2. Calculate the company's Profit Margin for the year ended December 31, 2002.