Question

Only for adjustments： how to adjusted unearned revenue？ And how adjusted income tax expense？

picture3: answer

Jef Jackson, Kaicho, founded Running Water Aikido in 1980 and serves as the principal Sensei (teacher). The dojo, located in Seattle, has two lines of business: offering Aikido classes and selling Aikido-related gear. The dojo employs many instructors, as well as a dojo manager who maintains financial records and membership information. Students of the dojo sign up for 3-month or 12-month memberships. 3-month memberships require monthly payments of $150. For these memberships, the student pays cash on the last of each month (for example, on April 30 a student with a 3-month membership pays $150 for attending classes in the month of April). For 12-month memberships, students have two options. They can, as with the 3-month memberships, pay the membership fee monthly; this costs $120 per month. Alternatively, they can prepay their entire year at the beginning of the year. Prepayment for a year costs the student S1,200, or $100 per month. As of February 1, 2018, the dojo had students with the following active memberships: 31 students with 3-month memberships. 48 students with 12-month memberships; 36 were prepaid, and the remaining 12 paid monthly . The dojo also sells Aikido gear. They sell three items: gi (Aikido uniform), bokken (wooden sword), and jo (wooden combat staff). The cost to the studio for a gi is S15 and they sell them for S30. The cost and price of a bokken is S60 and $90, respectively, and the cost and selling price of a jo is $45 and $65 The following activities take place during the month ended February 28, 2018. 1. On February 28, the dojo manager collects cash from all students on existing 3- and 12- month memberships who pay monthly for February classes (that is, all but prepaid 12 2. On February 1, the dojo sells the following four (4) new 12-month prepaid 3. As a special promotion, the dojo sells a gi at cost to the four new members with a 12 4. The dojo sells 4 gi, 5 bokken, and 3 jo. These transaction are all for cash. month memberships) memberships. month prepaid membership. These sales are for cash To replenish inventory supplies, the dojo manager purchases 5 each of gi, bokken, and jo. 5. are purchased on account, payable on March 7, 2018 These Instructors earn $1,400 for classes taught during February. For these classes, $900 is 6. paid in cash during February with the remaining amount payable in March. On February 5, the dojo pay January 7. s instructors $400 cash for classes that had been taught in I8. On February 15, the dojo pays $1,500 for advertisements in Seattle Weekly. The advertisement will run from March 1 until April 30.

Answer 1

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