Q2: Jimmys Co. is a small photography studio in Karachi. Photographers use the studio to make high quality photos. New elients are required to pay in advance for studio services. Photographers with established credit are billed for studio services at the end of each month. Adjusting entries are performed monthly. An unadjusted trial balance dated December 31, 2020, follows. (Bear in mind that adjusting entries already have been made for the first eleven months of 2020, but not for December.) Jimmys Co. Unadjusted Trial Balance December 31, 2020 Cash.. Accounts receivable Studio supplies. Unexpired insurance . Prepaid studio rent. Filming equipment Accumulated depreciation: filming equipment Notes payable. Interest payable Income taxes payable Unearned studio revenue. Capital stock. Retained earnings. Studio revenue earned Salaries expense Rs. 27,000 62,000 3,400 700 .. 5,000 120,000 Rs. 40,000 20,000 400 ........ 2,000 10,400 60,000 ..... ......*. 45,200 115,000 ..... 16,000 ....... Supplies expense. Insurance expense 800 ....... 1,100 22,000 Depreciation expense: filming equipment. Studio rent expense. Interest expense. Utilities expense Income taxes expense. 20,000 ....*******......... 400 2,600 12,000 Rs. 293,000 Rs. 293,000 Other Data 1. Records show that Rs. 7,200 in studio revenue had not yet been billed or recorded as of December 31. 2. Studio supplies on hand on December 31 amount to Rs. 3,000. 3. On June 1, 2002, the studio purchased a one-year insurance policy for Rs. 1,200. The entire premium was initially debited to Unexpired Insurance. 4. The studio is in a rented building. On November 1, 2020, the studio paid Rs. 6,000 rent in advance for six months. The entire amount was debited to Prepaid Studio Rent. 5. The useful life of the studio's recording equipment is estimated to be five years (or 60 months). The straight-line method of depreciation is used. 6. On September 1, 2020, the studio borrowed Rs. 20,000 by signing a 12-month, 12% note payable to Bank Alfalah. The entire Rs. 20,000 plus 12 months' interest is due in full on August 31, 2021. 7. Records show that Rs. 4,200 of cash receipts originally recorded as Unearned Studio Revenue had been earned as of December 31. 8. Salaries earned by recording technicians that remain unpaid at December 31 amount to Rs. 600. 9. The studio's accountant estimates that income taxes expense for the entire year ended December 31, 2020, is Rs. 15,000. (Note that Rs. 12,000 of this amount has already been recorded.) Instructions Note: There is no need to perform Adjusting/Closing steps/process. Students are required to directly prepare financial Statements as required below. Students may take help of worksheet method. I. Income Statement for the year ended December 31, 2020. I. Statement of Retained Earnings/Changes in owner equity for the year ended December 31, 2020. II. Balance Sheet as on December 31, 2020.