Adjusting Entries and Determining Account Balances Marvelous Music provides music lessons to student musicians. Some students pay in advance for lessons; others are billed after lessons have been provided. Advance payments are credited to an account entitled Uncamed Lesson Revenue. Adjusting entries are performed on a monthly basis. Below is an unadjusted trial balance dated December 31 of the current year. (Bear in mind that adjusting entries have already been made for the firstl1 months, but not for December.) amounts to $3,200. 2. Records show that $800 of cash receipts originally recorded as uneaned lesson revenue had been eamed as of December 31. 3. The company purchased a 12-month insurance policy on August I of the current year for $4,800. 4. On October 1 of the current year the company paid $9,000 for rent through March 31 of the upcoming year. 5. Sheet music supplies on hand at December 31 amount to $200. 6. All music equipment was purchased when the business was first formed. Its estimated life at that time was five years (or 60 months). 7. On November 1 of the current year the company borrowed $5,000 by signing a 3- month, 6 percent note payable. The entire note, plus three months' accrued interest, is due on February I of the upcoming year. 8. Accrued but unrecorded salaries at December 31 amount to $3,500. 9. Estimated income taxes expense for the entire year totals $22,000. Taxes are due in the first quarter of the upcoming year. MARVELOUS MUSIC UNADJUSTED TRIAL BALANCE DECEMBER 31, CURRENT YEAR Cash S15,800 Accounts receivable 2,100 Unexpired insurance Prepaid rent Sheet music supplies Music equipment Accumulated depreciation: music equipment Accounts payable Notes payable 3,200 6,000 450 180,000 1. For each of the numbered paragraphs, prepare the necessary adjusting entry (omit explanation). 2. Using T accounts, determine the new balances of the accounts affected by the adjusting journal entries. 3. Prepare the adjusted trial balance in good form $72,000 3,500 5,000 1,000 Dividends payable Interest payable Income taxes payable Uneamed lesson revenue 25 3,400 1,100 Capital stock Retained earmings 20,000 56,600 Dividends 1,000 Lesson revenue earned 154,375 Advertising expense 7,400 Insurance expense Rent expense Sheet music supplies expense Utilities expense 4,400 16,500 780 5,000 33,000 Depreciation expense: music equipment Salaries expense 27,500 Interest expense 25 13,845 S317.000 S317 000 Income taxes expense