Question

E4-19 Analyzing, Recording, and Summarizing Business Activities and Adjustments [LO 4-1, LO 4.2, LO 4-6] The following transactions relate to a magazine company called My Style Mag (MSM). Required: You will use your understanding of the relationships among (1) business activities, (2) accounting equation effects. (3) Journal entries. and (4) T-accounts to complete a four-part table out of which one part is already calculated. Items (a-i are independent of one another. Complete this question by entering your answers in the tabs below. Event A Event Event B Event Event Event Event Event E Event Event F Event F Event (a) 1. Given below the description of the business activity. On January 22, 2018, MSM received $24,000 cash from customers for one-year subscriptions to the magazine for February 2018 - January 2010 2. Complete the accounting equation. (Select any decreases to Assets, Liabilities, or Stockholders' Equity with a minus sign.) Assets = Liabilities + Stockholders' Equity 3. Prepare the appropriate journal entries. (If no entry is required for a transaction/event, select "No Journal Entry Required in the first account field.) Account Title Debit Credit 4. Post the journal entries to the appropriate T-Accounts. (Enter transaction into T-accounts. Ignore beginning and ending balances.) Cash Accounts Receivable Deferred Revenue Event A Event B >

Answer 1

Answer for Event A:

Event A 1. Business Activity: On January 22, 2018 MSM received $24,000 cash from customers for one year subscriptions to the magazine for February 2018 to January 2019. 2. Accounting Equation: Shareholders + Equity Assets Liabilities Deferred Revenue + 24,000 Cash + 24,000 3. Journal Entry: Account Title Debit Credit - Cash $ 24,000 - Deferred Revenue $ 24,000 - (To record cash received for services to be provided in the future) 4. T-accounts: Cash $ 24,000 Deferred Revenue $ 24,000 2

Answer for Event B:

Event B 1. Business Activity: MSM received utilities services $3,000 at a cost of $3,000. + Shareholders Equity 2. Accounting Equation: Assets = Liabilities Accounts Payable +3,000 + Utilities Expense -3,000 Credit 3. Journal Entry: Account Title Debit Utilities Expense $ 3,000 Accounts Payable (To record utilities expense on account) $ 3,000 4. T-accounts: Utilities Expense 2,000 Accounts Payable 2,000

Answer for Event C:

Event C 1. Business Activity: On Feb 28, MSM $2,000 subscriptions for which it had previously received payment. 2. Accounting Equation: Assets = Liabilities + Shareholders Equity Deferred Subscription Revenue -2,000 + Revenue +2,000 3. Journal Entry: Account Title Debit Credit Deferred Revenue $ 2,000 Subscription Revenue 2,000 (To record services provided for which payment was already received) 4. T-accounts: Deferred Revenue 2,000 Subscription Revenue 2,000

Answer for Event D:

Event D 1. Business Activity: On March 31, 2018 MSM recorded an adjusting entry for the month depreciation on equipment of $10,000 Liabilities + Shareholders Equity 2. Accounting Equation: Assets = Accumulated Depreciation - Equipment - 10,000 Depreciation + Expense -10,000 3. Journal Entry: Account Title Debit Credit Depreciation Expense $ 10,000 Accumulated Depreciation - Equipment (To record depreciation expense on equipment) 10,000 4. T-accounts: Accumulated Depreciation - Equipment 10,000 Depreciation Expense 10,000

Answer for Event E:

Event E 1. Business Activity: On April 1, MSM paid $5,000 rent in advance of obtaining its benefits Liabilities + Shareholders Equity 2. Accounting Equation: Assets = Cash -5,000 Prepaid Rent +5,000 Credit 3. Journal Entry: Account Title Prepaid Rent $ Cash (To record rent paid in advance) Debit 5,000 5,000 4. T-accounts: Cash 5,000 Prepaid Rent 5,000

Answer for Event F:

Event F 1. Business Activity: On April 30, MSM billed customers for $10,000 of advertising services of $10,000 Liabilities + Shareholders Equity 2. Accounting Equation: Assets = Accounts Receivable +10,000 + Service Revenue +10,000 Credit 3. Journal Entry: Account Title Debit Accounts Receivable $ 10,000 Service Revenue (To record billing of customers on account) $ 10,000 4. T-accounts: Accounts Receivable $ 10,000 Service Revenue 10,000