Response to the following problem:
Explain how accrual accounting differs from cash-basis accounting; adjust the accounts
An accountant made the following adjustments at December 31, the end of the accounting period:
a. Prepaid insurance, beginning, $450. Payments for insurance during the period, $1,600. Prepaid insurance, ending, $500.
b. Interest revenue accrued, $2,700.
c. Unearned service revenue, beginning, $1,400. Unearned service revenue, ending, $300.
d. Depreciation, $5,400.
e. Employees' salaries owed for two days of a five-day work week; weekly payroll, $25,000.
f. Income before income tax, $26,000. Income tax rate is 35%.