Explain how accrual accounting differs from cash-basis accounting; adjust the accounts
Response to the following problem:
An accountant made the following adjustments at December 31, the end of the accounting period:
a. Prepaid insurance, beginning, $600. Payments for insurance during the period, $2,400. Prepaid insurance, ending, $700.
b. Interest revenue accrued, $2,600.
c. Unearned service revenue, beginning, $1,700. Unearned service revenue, ending, $500.
d. Depreciation, $5,800.
e. Employees' salaries owed for two days of a five-day work week; weekly payroll, $20,000.
f. Income before income tax, $21,000. Income tax rate is 35%.