Marvelous Music provides music lessons to student musicians. Adjusting entries are performed 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 11 months of 2020, but not for December.) Prepare the necessary adjusting entry. Prepare an adjusted trial balance. An unadjusted trial balance is given below. MARVELOUS MUSIC UNADJUSTED TRIAL BALANCE DECEMBER 31, 2020 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15,800 Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100 Unexpired insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200 Prepaid rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 Sheet music supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 Music equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marvelous Music provides music lessons to student musicians.
- Prepare the necessary adjusting entry.
- Prepare an adjusted trial balance. An unadjusted trial balance is given below.
MARVELOUS MUSIC
UNADJUSTED TRIAL BALANCE
DECEMBER 31, 2020
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15,800
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100
Unexpired insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200
Prepaid rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Sheet music supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450
Music equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .180,000
Accumulated depreciation: music equipment . . . . . . . . . . . . . . . . . . . . 72,000
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,400
Unearned lesson revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,100
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
Lesson revenue earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154,375
Advertising expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7,400
Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,400
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,500
Sheet music supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 780
Utilities expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Depreciation expense: music equipment . . . . . . . . . . . . . . . . . . . . . . .33,000
Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,500
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Income taxes expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,845
317,000 317,000
Data for adjusting entries:
- Accrued but unrecorded lesson revenue earned as of December 31, 2020, amounts to 5,000.
- 1000 unearned lesson revenue had been earned as of December 31.
- The company purchased a 12-month insurance policy on August 1, 2020, for $4,800.
- On October 1, 2020, the company paid 9,000 for rent through March 31, 2021.
- Sheet music supplies on hand at December 31 amount to 250.
- All music equipment was purchased when the business was first formed. Its estimated life at that time was five years (or 60 months).
- On November 1, 2020, the company borrowed 5,000 by signing a three-month, 6 percent note payable. The entire note, plus three months’ accrued interest, is due on February 1, 2021
- Accrued but unrecorded salaries at December 31 amount to 3,500.
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