Question

Continuing Problem
Chapter 2-Instruction #1

Save a copy of the spreadsheet by clicking on the "Spreadsheet" here. You will need this completed spreadsheet for the remaining parts of this Continuing Problem. Be sure to save the spreadsheet in a safe place for future use.

PS Music's chart of accounts and the balance of accounts as of July 1, 2019 (all normal balances), are as follows:

11	Cash	$3,920		41	Fees Earned	$6,200
12	Accounts Receivable	1,000		50	Wages Expense	400
14	Supplies	170		51	Office Rent Expense	800
15	Prepaid Insurance	—		52	Equipment Rent Expense	675
17	Office Equipment	—		53	Utilities Expense	300
21	Accounts Payable	250		54	Music Expense	1,590
23	Unearned Revenue	—		55	Advertising Expense	500
31	Peyton Smith, Capital	4,000		56	Supplies Expense	180
32	Peyton Smith, Drawing	500		59	Miscellaneous Expense	415

Required:

Review the spreadsheet and notice that the July 1, 2019, account balances have been entered in the appropriate balance column of the four-column accounts. The word Balance has been entered in the Item column, and a check mark (√) has been entered in the Posting Reference column.

Continuing Problem
Chapter 2-Instruction #2

The following transactions were completed by PS Music during July, the second month of the business's operations:

Analyze and journalize each transaction in the two-column journal below. Include Posting References, using the account numbers in your spreadsheet.

If an amount box does not require an entry, leave it blank.

July 1: Peyton Smith made an additional investment in PS Music by depositing $5,000 in PS Music's checking account.

Account	Post. Ref.	Debit	Credit

July 1: Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music store. Paid rent for July, $1,750.

Account	Post. Ref.	Debit	Credit

July 1: Paid a premium of $2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period.

Account	Post. Ref.	Debit	Credit

July 2: Received $1,000 cash from customers on account.

Account	Post. Ref.	Debit	Credit

July 3: On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of $3,600. Any additional hours beyond 80 will be billed to KXMD at $40 per hour. In accordance with the contract, Peyton received $7,200 from KXMD as an advance payment for the first two months.

Account	Post. Ref.	Debit	Credit

July 3: Paid $250 to creditors on account.

Account	Post. Ref.	Debit	Credit

July 4: Paid an attorney $900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.)

Account	Post. Ref.	Debit	Credit

July 5: Purchased office equipment on account from Office Mart, $7,500.

Account	Post. Ref.	Debit	Credit

July 8: Paid for a newspaper advertisement, $200.

Account	Post. Ref.	Debit	Credit

July 11: Received $1,000 for serving as a disc jockey for a party.

Account	Post. Ref.	Debit	Credit

July 13: Paid $700 to a local audio electronics store for rental of digital recording equipment.

Account	Post. Ref.	Debit	Credit

July 14: Paid wages of $1,200 to receptionist and part-time assistant.

Account	Post. Ref.	Debit	Credit

July 16: Received $2,000 for serving as a disc jockey for a wedding reception.

Account	Post. Ref.	Debit	Credit

July 18: Purchased supplies on account, $850.

Account	Post. Ref.	Debit	Credit

July 21: Paid $620 to Upload Music for use of its current music demos in making various music sets.

Account	Post. Ref.	Debit	Credit

July 22: Paid $800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July.

Account	Post. Ref.	Debit	Credit

July 23: Served as disc jockey for a party for $2,500. Received $750, with the remainder due August 4, 2019.

Account	Post. Ref.	Debit	Credit

July 27: Paid electric bill, $915.

Account	Post. Ref.	Debit	Credit

July 28: Paid wages of $1,200 to receptionist and part-time assistant.

Account	Post. Ref.	Debit	Credit

July 29: Paid miscellaneous expenses, $540.

Account	Post. Ref.	Debit	Credit

July 30: Served as a disc jockey for a charity ball for $1,500. Received $500, with the remainder due on August 9, 2019.

Account	Post. Ref.	Debit	Credit

July 31: Received $3,000 for serving as a disc jockey for a party.

Account	Post. Ref.	Debit	Credit

July 31: Paid $1,400 royalties (music expense) to National Music Clearing for use of various artists' music during July.

Account	Post. Ref.	Debit	Credit

July 31: Withdrew $1,250 cash from PS Music for personal use.

Account	Post. Ref.	Debit	Credit

Continuing Problem
Chapter 2-Instruction #3

Post the journal entries completed in Chapter 2 Part 2 to the ledgers in the spreadsheet you saved in Chapter 2 Part 1. When entering the Posting References, use journal page 1 for transactions from July 1-14, and use journal page 2 for transactions from July 16-31. Extend the account balance to the appropriate balance column after each posting. Be sure to save your work in the spreadsheet.

Continuing Problem
Chapter 2-Instruction #4

Refer to your answers from Chapter 2, Part 3 to complete this part.

Prepare an unadjusted trial balance as of July 31, 2019.

Answer 1

D Journal Entries Debit ($) | Credit ($) $ 5,000 Account Titles Date 1-Jul Cash 3 Peyton Smith, Capital 5,000 4 (To record the additional investment) Rent Expense $ 1,750 1-Jul Cash 1,750 (To record the rent expense) 1-Jul Prepaid Insurance $ 2,700 Cash 2,700 10 (To record the insurance paid) 11 $ 1,000 2-Jul Cash 12 Service Revenue 1,000 13 |(To record the serivce earned) 14 $ 7,200 3-Jul Cash 15 Unearned Service Revenue 7,200 16 (To record the advance payment) Accounts Payable 17 3-Jul 250 18 Cash 250 19 (To record the cash paid to creditor) Miscellaneous Expense 20 4-Jul 900 21 Cash 900 22 (To record the expense) |Office Equipment 23 $ 7,500 5-Jul 24 Accounts Payable (To record the purchase) 7,500 25 26 %24 2.

D Advertisement Expense 8-Jul 200 27 Cash 200 28 |(To record the advertisement paid) 11-Jul Cash 29 $ 1,000 30 Service Revenue 1,000 31 |(To record the service earned) 13-Jul Equipment Rent Expense Cash 32 700 33 700 34 |(To record the rent expense) Wages and Salaries Expense 35 $ 1,200 14-Jul 36 Cash 1,200 37 |(To record the wages paid) 38 16-Jul Cash $ 2,000 39 Service Revenue 2,000 40 |(To record the service earned) 41 18-Jul Supplies 850 42 Accounts Payable |(To record the supplies purchased) 850 43 44 21-Jul Music Expense 620 45 Cash 620 46 |(To record the expense paid) Advertisement Expense 47 22-Jul 800 48 Cash 800 49 |(To record the advertisement paid) 50 23-Jul Cash 750 51 $ 1,750 Accounts Receivable 52 Service Revenue 2,500 53 |(To record the service earned) 54 %24 %24 %24 %24

D 27-Jul Utility Expense 915 55 Cash 915 56 |(To record the electricity paid) 28-Jul Wages and Salaries Expense 57 $ 1,200 58 1,200 Cash 59 |(To record the wages paid) 29-Jul Miscellaneous Expense 60 540 61 Cash 540 62 (To record the expense paid) 63 30-Jul Cash 500 64 $ 1,000 Accounts Receivable 65 Service Revenue 1,500 66 |(To record the service earned) 67 31-Jul Cash $ 3,000 68 Service Revenue 3,000 69 |(To record the service earned) 70 31-Jul Music Expense $ 1,400 71 Cash 1,400 72 |(To record the expense paid) 31-Jul Peyton Smith, Drawing 73 $ 1,250 74 Cash 1,250 75 |(To record the cash withdraw) 76 77 %24 %24

Н J Accounts Payable Cash Fees Earned $ 1,750 $ 6,200 $ 1,000 $ 1,000 $ 2,000 $ 2,500 $ 3,920 $ 5,000 $ 1,000 $ 7,200 $ 1,000 $ 2,000 3-Jul 1-Jul 1-Jul 1-Jul 1-Jul 250 250 $ 2,700 $ 7,500 1-Jul 1-Jul 4-Jul 1-Jul 3 3-Jul 2-Jul 250 18-Jul 11-Jul 850 16-Jul 3-Jul 4-Jul 900 $ 8,350 31-Jul 11-Jul 23-Jul 8-Jul 200 13-Jul $ 1,500 $ 3,000 16-Jul 30-Jul 700 $ 1,200 23-Jul 14-Jul Unearned Revenue 31-Jul 750 8 $ 7,200 30-Jul 2$ 500 21-Jul 3-Jul 620 $ 17,200 $ 3,000 31-Jul 31-Jul 22-Jul 800 10 $ 7,200 31-Jul 27-Jul 915 11 $ 1,200 Wages Expense 2$ 28-Jul 12 Peyton, Capital 29-Jul 1-Jul 540 400 13 $ 1.400 $ 1,250 $ 4,000 $ 5,000 $ 1,200 $ 1,200 31-Jul 1-Jul 14-Jul 14 1-Jul 31-Jul 28-Jul 15 16 $ 9,945 $ 9,000 $ 2,800 31-Jul 31-Jul 31-Jul 17 18 Peyton Smith, Drawing $ 1,250 Office Rent Expense Accounts Receivable $ 1,000 $ 1,750 19 1-Jul 1-Jul 800 31-Jul 20 $ 1,750 23-Jul 1-Jul 21 31-Jul $ 1,250 30-Jul $ 1,000 22 $ 2,550 31-Jul 23 $ 3,750 31-Jul 24 R.

Н J Equipment Rent Expense 25 Supplies Expense Supplies 1-Jul 2$ 675 26 1-Jul 1-Jul 13-Jul 27 170 180 700 18-Jul 850 28 $ 1.375 31-Jul 31-Jul 180 29 $ 1,020 31-Jul 30 Miscellaneous Expense Utilities Expense 31 Prepaid Insurance $ 2,700 1-Jul 1-Jul 32 415 300 1-Jul 27-Jul 4-Jul 900 915 33 29-Jul 540 34 $ 2,700 $ 1,215 31-Jul 31-Jul 35 $ 1,855 31-Jul 36 Office Equipment $ 7,500 Music Expense $ 1,590 37 5-Jul 1-Jul 38 21-Jul 620 39 $ 7,500 $ 1,400 31-Jul 31-Jul 40 41 $ 3,610 31-Jul 42 43 Advertising Expense 44 1-Jul 500 45 8-Jul 200 46 22-Jul 2$ 47 800 48 $ 1,500 31-Jul 49 50

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