Question

Problem 2 (39 points) Funky Music provides music lessons to student musicians. Adjusting entries are performed on a monthly basis but performs closing entries annually on December 31. An unadjusted trial balance dated December 31, 2015, is provided below. (Bear in mind that adjusting entries already have been made for the first eleven months of 2015, but not for December.) Data for adjustments: Lessons revenue earned but not yet recorded as of December 31, 2015, amounts to $8,210 2. Records show that $500 of cash receipts originally recorded as unearned revenue had bee earned as of December 31. 1. wolod 3. The company purchased a 6-month insurance policy on August 1, 2015, for $9,600. 4. On November 1, 2015, the company paid $7,200 for rent to cover the next 6 months. 5. Sheet music supplies consumed during december total $280. 6. All music equipment was purchased when the business was first formed. It estimated life that time was six years (72 months). 7. On November 1, 2015, the company borrowed $5,000 by signing a six-month, 6% m payable. The entire note, plus six months' interest is due on May 1, 2016. 8. Salaries earned by the employees and not yet recorded or paid at December 31 amou $5,500.

Answer 1

Journal Entries Date Account Title and Explaination Post. Debit Credit Ref. S 8,210.00 Accounts Receivables Lession Revenue Earned (To record Studio revenue earned) 8,210.00 2 500.00 Unearned Lession Revenue Lession Revenue earned (To record lession revenue earned) 500.00 1,600.00 Insurance Expense ($9600/6 months) Unexpired Insurance (To record expired portion of prepaid insurance) 1,600.00 1,200.00 Rent Expense ($7200/6months) Prepaid Studio Rent (To record expense portion of prepaid rent) 1,200.00 280.00 Sheet Music Supplies Expense Sheet Music Supplies (To record consumption of Sheet Music Supplies) 280.00

Depreciation Expense - Music Equipment ($180000/72 months) Accumulated Depreciation - Music Equipment (To record Depreciation Expense on Music Equipment) 2,500.00 $ 2,500.00 25.00 Interest Expense ($5000 x 6% x 1/12) Interest Payable (To record accrued interest expense) 25.00 5,500.00 Salaries Expense Salaries Payable (To record salaries earned by employees) 5,500.00