Question

Small Musical Production is owned and operated by Richard Small and the company’s financial year end is June 30th each year. Consider the unadjusted trial balance of the company at June 30, 2014, and the related month-end adjustment data.

Small Musical Production Trial Balance 30-Jun-14

Adjustment data at June 30 follow:

| Credit Debit 200.000 85,000 105,000 45,000 345,000 155.000 Cash | Accounts receivable Prepaid rent Supplies Motor Vehicle Accumulated depreciation Salary Payable Accounts payable | Unearned service revenue R Small, capital R Small, drawing Service revenue Salary expense Rent expense Miscellaneous expense Depreciation expense Supplies expense 159,000 100,000 400,000 14,000 350,000 255,000 105,000 10,000 1,164,000 1,164,000

a. Supplies on hand at year-end, $9,000.                  
b. Seven (7) months of rent ($105,000) were paid in advance on February 1, 2014.

c. Depreciation expense on the mobile vehicle of $34,500 has not been recorded.      
d. Salary not paid at year end $25,000                  
e. Service revenue of $9,000 must be accrued.                  
f. Small received $100,000 in advance for consulting services to be provided evenly from January 1, 2014, through October 31, 2014. None of the revenue from this client has been recorded.

Requirement:
1.   Prepare the adjusting entries for the company based on the information presented.
2.   From the information presented, prepare the company’s adjusted trial balance for June 30, 2014
3.   Prepare the income statement for the year ended June 30, 2014
4.   Prepare the owner’s equity statement for the year ended June 30, 2014
5.   Prepare the balance sheet as at June 30,2014

Answer 1

	Small Musical Production is owned and operated by
	Richard Small and the Company financial Year ended
	With June 30th
	We have to accounted Month end Adjustmenrt entry and Balances
Sl No	Details		Debit($)	Credit($)
a	Supplies at hand at Year end $ 9000 so Balance amount
	Supplies		45,000
	Less
	Closing Balance in Hand		9,000
	Supplie Expenses		36,000
	Journal
	Details		Debit($)	Credit($)
	Supplie Expenses		36,000
	Store Supply			36,000
b	Rent Expenses		15,000
	Pre paid Rent			15,000
	( 105000/7 Month
	( 7 months rent paid in Advance )
c	Depreciation		34,500
	Accumulated Depreciation			34,500
d	Salary Expenses		25,000
	Salary Payable			25,000
e	Account Receivable		9,000
	Revenue			9,000
	( accrued revenue)
f	Unearned Revenue		60,000
	Revenue			60,000

	Before adjustment		Adjustment		After Adjusted TB		Adjustment No
	Debit($)	Credit($)	Debit($)	Credit($)	Debit($)	Credit($)
Cash	2,00,000				2,00,000
Account Receivable	85,000		9,000		94,000		e
Prepaid Rent	1,05,000			15,000	90,000		b
Supplies	45,000			36,000	9,000		a
Motor Vehicle	3,45,000				3,45,000	-
Accumulated Depreciation		1,55,000		34,500		1,89,500	c
Salary Payable				25,000		25,000	d
Account Payable		1,59,000				1,59,000
Unearned Service Revenue		1,00,000	60,000			40,000	f
R Small Capital		4,00,000				4,00,000
R Small Withdrawl	14,000				14,000
Service Revenue		3,50,000		69,000		4,19,000	(e+f)
Salary Expense	2,55,000		25,000		2,80,000		d
Rent Expenses	1,05,000		15,000		1,20,000		b
Misc Expenses	10,000				10,000
Depreciation Expense			34,500		34,500		c
Supplies\ Expense			36,000		36,000		a
Total	11,64,000	11,64,000	1,79,500	1,79,500	12,32,500	12,32,500

Derived Income Statement
		Amnt($)	Amnt($)
Revenue			4,19,000
Cost
Salary Expense		2,80,000
Rent Expenses		1,20,000
Misc Expenses		10,000
Depreciation Expense		34,500
Supplies\ Expense		36,000
Total Cost(Expenses)			4,80,500
Net Profit			-61,500

Derived Balance Sheet as on 3oth June
	Amnt($)	Amnt($)		Amnt($)	Amnt($)
Current Asset			Current Liability
cash		2,00,000	Accounts Payable		1,59,000
Account Receivable		94,000	Salary Payable		25,000
Prepaid Rent		90,000
Supplies		9,000	Unearned Service Revenue		40,000
Total Current Assets		3,93,000	Total Current Liability		2,24,000
Property Plant and Equipment
Book value	3,45,000
Less-			Owners Equity
Accumulated Depreciation	1,89,500		Opening Bal	4,00,000
Net Asset		1,55,500	Add- Net Profit current Month	-61,500
			Total	3,38,500
			Less- Withdraw	14,000	3,24,500
Total Assets		5,48,500	Total Liability+ Equity		5,48,500