Question

Continuing Problem 4. Total of Debit column: The transactions completed by PS Music during June 20Y5 were described at the end of Chapter 1. The $40,750 following transactions were completed during July, the second month of the business's operations: July 1. Peyton Smith made an additional investment in PS Music in exchange for common stock by depositing $5,000 in PS Music's checking account. 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, 51,750. 1. Paid a premium of $2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period. 2. Received $1,000 on account. 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 540 per hour. In accor- dance with the contract, Peyton received $7,200 from KXMD as an advance payment for the first two months. 3. Paid $250 on account. 4. Paid an attorney $900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5. Purchased office equipment on account from Office Mart, $7,500. 8. Paid for a newspaper advertisement, $200. 11. Received $1,000 for serving as a disc jockey for a party. 13. Paid $700 to a local audio electronics store for rental of digital recording equipment. 14. Paid wages of $1,200 to receptionist and part-time assistant. Enter the following transactions on Page 2 of the two-column journal: 16. Received $2,000 for serving as a disc jockey for a wedding reception. 18. Purchased supplies on account, $850. 21. Paid $620 to Upload Music for use of its current music demos in making various music sets. 22. Paid $800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23. Served as disc jockey for a party for $2,500. Received $750, with the remainder due August 4, 20YS. 27. Paid electric bill, $915. 28. Paid wages of $1,200 to receptionist and part-time assistant. 29. Paid miscellaneous expenses, $540. 30. Served as a disc jockey for a charity ball for $1,500. Received $500, with the remainder due on August 9, 20Y5. 31. Received $3,000 for serving as a disc jockey for party. 31. Paid $1,400 royalties (music expense) to National Music Clearing for use of various artists' music during July. 31. Paid dividends, $1,250. a (Continued)

Answer 1

Entries

Post Ref Debit Credit PS Music Journal entries Date Account Page 1 1-Jul Cash Common Stock $ 5,000 J1 J1 $ 5,000 1-Jul J1 Office Rent Expense Cash $ 1,750 J1 $ 1,750 1-Jul J1 $ 2,700 Prepaid Insurance Cash J1 $ 2,700 2-Jul J1 $ 1,000 Cash Accounts Receivable J1 $ 1,000 3-Jul J1 $ 7,200 Cash Unearned Revenue J1 $ 7,200 3-Jul J1 $ 250 Accounts Payable Cash J1 $ 250 4-Jul J1 $ 900 Miscellaneous Expense Cash J1 $ 900 5-Jul J1 $ 7,500 Office Equipment Accounts Payable J1 $ 7,500 8-Jul J1 $ 200 Advertising Expense Cash J1 $ 200 11-Jul J1 $ 1,000 Cash Fees Earned J1 $ 1,000 J1 $ 700 13-Jul Equipment Rent Expense Cash J1 $ 700 J1 $ 1,200 J1 $ 1,200 14-Jul Wages Expense Cash Page 2 16-Jul Cash Fees Earned J2 $ 2,000 J2 $ 2,000 J2 $ 850 18-Jul Supplies Accounts Payable J2 es 850 $ 620 21-Jul Music Expense Cash J2 J2 $ 620 J2 $ 800 22-Jul Advertising Expense Cash J2 $ 800 J2 23-Jul Cash Accounts Receivable Fees Earned $ 750 $ 1,750 J2 J2 $ 2,500 J2 $ 915 27-Jul Utilities Expense Cash J2 $ 915 J2 $ 1,200 28-Jul Wages Expense Cash J2 $ 1,200 J2 $ 540 29-Jul Miscellaneous Expense Cash J2 $ 540 30-Jul Cash Accounts Receivable Fees Earned J2 12 $ 500 $ 1,000 J2 $ 1,500 $ 3,000 31-Jul Cash Fees Earned J2 J2 $ 3,000 J2 $ 1,400 31-Jul Music Expense Cash J2 $ 1,400 J2 $ 1,250 31-Jul Dividends Cash J2 $ 1,250

PS Music 4 column Ledger accounts Date Item Balance Credit Debit Credit Post Ref Debit Cash ✓ $5,000 J1 J1 Balance Date Item Post Ref Debit Credit Debit Credit Accounts Receivable 1-Jul Balance ✓ $1,000 2-Jul Cash J1 $1,000 $ 23-Jul Fees Earned J2 $1,750 $1,750 30-Jul Fees Earned 22 $1,000 $2,750 $2,750 $2,750 $2,750 J1 J1 $1,000 $ 7,200 J1 J1 J1 J1 J1 $1,000 J1 1-Jul Balance 1-Jul Common Stock 1-Jul Office Rent Expense 1-Jul Prepaid Insurance 2-Jul Accounts Receivable 3-Jul Unearned Revenue 3-Jul Accounts Payable 4-Jul Miscellaneous Expense 8-Jul Advertising Expense 11-Jul Fees Earned 13-Jul Equipment Rent Expense 14-Jul Wages Expense 16-Jul Fees Earned 21-Jul Music Expense 22-Jul Advertising Expense 23-Jul Fees Earned 27-Jul Utilities Expense 28-Jul Wages Expense 29-Jul Miscellaneous Expense 30-Jul Fees Earned 31-Jul Fees Earned 31-Jul Music Expense 31-Jul Dividends J1 $ 3,920 $ 8,920 $1,750 $ 7,170 $2,700 $ 4,470 $ 5,470 $ 12,670 $ 250 $ 12,420 $ 900 $11,520 $ 200 $ 11,320 $ 12,320 $ 700 $11,620 $ $1,200 $ 10,420 $ 12,420 $ 620 $ 11,800 $ 800 $11,000 $11,750 $ 915 $10,835 $1,200 $ 9,635 $ 540 $ 9,095 $ 9,595 $ 12,595 $1,400 $11,195 $1,250 $ 9,945 J2 $2,000 J2 J2 J2 $ 750 J2 J2 1-Jul Balance 18-Jul Accounts Payable J2 J2 $ 500 J2 $3,000 J2 J2 Supplies v J2 $ 850 Office Equipment ✓ J1 $7,500 Accounts Payable ป J1 $ 250 J1 $ 170 $ 1,020 1-Jul Balance 1-Jul Cash Prepaid Insurance ✓ $ 2,700 $ . $2,700 J1 1-Jul Balance 5-Jul Accounts Payable $ $ 7,500 Unearned Revenue V $ 1-Jul Balance 3-Jul Cash J1 $ 7,200 1-Jul Balance 3-Jul Cash 5-Jul Office Equipment 18-Jul Supplies $ 250 $ $ 7,500 $ 8,350 $7,500 $ 850 $ 7,200 $ 7,200 $ 7,200 J2 Common Stock ✓ Dividends 1-Jul Balance ✓ $ 4,000 1-Jul Balance $ 9,000 31-Jul Cash $ 500 $1,750 1-Jul Cash J1 $5,000 J2 $1,250 $1,000 $2,000 $ 2,500 $1,500 $3,000 $ 6,200 $ 7,200 $ 9,200 $ 11,700 $ 13,200 $ 16,200 $ 800 Office Rent Expense ป J1 $1,750 $ 400 $ 1,600 $ 2,800 1-Jul Balance 1-Jul Cash Fees Earned 1-Jul Balance ✓ 11-Jul Cash - J1 16-Jul Cash J2 23-Jul Cash and Accounts Receivable J2 30-Jul Cash and Accounts Receivable J2 31-Jul Cash J2 Wages Expense 1-Jul Balance ✓ 14-Jul 'Cash J1 $1,200 28-Jul Cash J2 $1,200 Equipment Rent Expense 1-Jul Balance ✓ 13-Jul Cash J1 $ 700 Music Expense 1-Jul Balance ✓ 21-Jul Cash J2 $ 620 31-Jul Cash J2 $1,400 Supplies Expense 1-Jul Balance V $2,550 $ 2,550 $ 675 $ 1,375 1-Jul Balance 27-Jul Cash $ 300 $1,215 $ 1,590 $ 2,210 $ 3,610 1-Jul Balance 8-Jul Cash 22-Jul Cash Utilities Expense ✓ J2 $ 915 Advertising Expense ✓ J1 $ 200 J2 $ 800 Miscellaneous Expense ✓ J1 $ 900 J2 $ 540 $ 500 $ 700 $1,500 180 $ $ $ 180 1-Jul Balance 4-Jul Cash 29-Jul Cash $ 415 $1,315 $1,855 180

PS Music Account Names Cash Accounts Receivable Supplies Prepaid Insurance Office Equipment Accounts Payable Unearned Revenue Common Stock Dividends Fees Earned Wages Expense Office Rent Expense Equipment Rent Expense Utilities Expense Music Expense Advertising Expense Supplies Expense Miscellaneous Expense Totals Unadjusted TB Debit Credit 9,945 2,750 1,020 2,700 7,500 8,350 7,200 9,000 1,750 16,200 2,800 2,550 1,375 1,215 3,610 1,500 180 1,855 40,750 40,750