Q.2 Marvelous Music provides music lessons to student musicians. Adjusting entries areperformed on a monthly basis. An unadjusted trial balance dated December 31, 2020, follows.(Bear in mind that adjusting entries have already been made for the first 1 months of 2020, butnot for December.)a. Prepare the necessary adjusting entry.b. Prepare an adjusted trial balance. An unadjusted trial balance is given below.MARVELOUS MUSICUNADJUSTED TRIAL BALANCEDECEMBER 31, 2020Cash...15,800Accounts receivable.2,100Unexpired insurance.3,200Prepaid rent .6.000Sheet music supplies.450Music equipment.....180,000Accumulated depreciation: music equipment72,000Accounts payable ..Notes payable..3,5005,000Dividends payable.1,000Interest payable..25Income taxes payable.3,400Unearned lesson revenue.1,100Capital stock20,000.Retained earnings.56,600Dividends1,000Lesson revenue carned154,375Advertising expense..7,400Insurance expense...4,400Rent expense.16,500Sheet music supplies expense780Utilities expense......5,000Depreciation expense: music equipment.33,000Salaries expense27,500Interest expense ..Income taxes expense.2513,845317,000317.000Data for adjusting entries:1. Accrued but unrecorded lesson revenue earned as of December 31, 2020, amounts to 5,0002. 1000 uncurned lesson revenue had been carned as of December 31.3. The company purchased a 12-month insurance policy on August 1, 2020, for S4,800.4. On October 1, 2020, the company paid 9,000 for rent through March 31, 2021.5. Sheet music supplies on hand at December 31 amount to 250.6. All music equipment was purchased when the business was first formed. Its estimated life atthat time was five years (or 60 months).7. On November 1, 2020, the company borrowed 5,000 by signing a three-month, 6 percent

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Answered: a. Prepare the necessary adjusting…

Business

Accounting

a. Prepare the necessary adjusting entry.

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter22: End-of-fiscal-period Work For A Corporation

Section22.1: Preparing Adjusting Entries

Problem 1WT

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The unadjusted trial balance of Recessive Interiors at January 31, 2019, the end of the year, follows: The data needed to determine year-end adjustments are as follows: a. Supplies on hand at January 31 are 2,850. b. Insurance premiums expired during the year are 3,150. c. Depreciation of equipment during the year is 5,250. d. Depreciation of trucks during the year is 4,000. e. Wages accrued but not paid at January 31 are 900. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark () in the Posting Reference column. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Recessive Interiors chart of accounts should be used: Wages Payable, 22; Depreciation ExpenseEquipment, 54; Supplies Expense, 55; Depreciation ExpenseTrucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of owners equity (no additional investments were made during the year), and a balance sheet. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.
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