Emily's Music AcademyAfter several years as a successful Music Teacher at a School, you decide to quit the job and open your own music academy. You decide that your neighbourhood would be the perfect place to open a music academy. Even better, your friend Grace, a well-qualified and Fexperienced music trainer has just moved to Sydney and is willing to work at your academy.You hurriedly prepare to open the Emily's Music Academy by May 1, 2023. In the first month of operation, on 1st May 2023, the following transactions took place. In preparation for your opening, you engage in the following transactions on May 1,2023: 1. You contribute $50,000 in cash to start the business.2. You borrow $15,000 in cash from the local bank. This loan will have to be repaid after 3 years.3. You purchased $18,000 worth of equipment for use during the sessions for cash.4. You purchased an additional $9,000 worth of furniture for cash.5. You purchased liability insurance at a total cost of $4,800. The policy is for 8 months from I May, 2023, through to 31 Dec 2023. (Hint: Is this an expense or a prepaid expense?) The following transactions took place during May 2023DateTransactionMay3 You collected $5,000 in total from new members as the membership and music session fee for May 2023 in cash.7Rent is paid for the month of May 2023 in cash $2500.15Grace, the qualified music trainer is paid $2,800 by cash as salary for May 2023.21You want to promote your business, so you planned an advertising campaign costing $ 1000. Payment has not yet been made.
Emily's Music AcademyAfter several years as a successful Music Teacher at a School, you decide to quit the job and open your own music academy. You decide that your neighbourhood would be the perfect place to open a music academy. Even better, your friend Grace, a well-qualified and Fexperienced music trainer has just moved to Sydney and is willing to work at your academy.You hurriedly prepare to open the Emily's Music Academy by May 1, 2023. In the first month of operation, on 1st May 2023, the following transactions took place. In preparation for your opening, you engage in the following transactions on May 1,2023: 1. You contribute $50,000 in cash to start the business.2. You borrow $15,000 in cash from the local bank. This loan will have to be repaid after 3 years.3. You purchased $18,000 worth of equipment for use during the sessions for cash.4. You purchased an additional $9,000 worth of furniture for cash.5. You purchased liability insurance at a total cost of $4,800. The policy is for 8 months from I May, 2023, through to 31 Dec 2023. (Hint: Is this an expense or a prepaid expense?) The following transactions took place during May 2023DateTransactionMay3 You collected $5,000 in total from new members as the membership and music session fee for May 2023 in cash.7Rent is paid for the month of May 2023 in cash $2500.15Grace, the qualified music trainer is paid $2,800 by cash as salary for May 2023.21You want to promote your business, so you planned an advertising campaign costing $ 1000. Payment has not yet been made.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Emily's Music AcademyAfter several years as a successful Music Teacher at a School, you decide to quit the job and open
your own music academy. You decide that your neighbourhood would be the perfect place to open a music academy.
Even better, your friend Grace, a well-qualified and Fexperienced music trainer has just moved to Sydney and is willing
to work at your academy.You hurriedly prepare to open the Emily's Music Academy by May 1, 2023. In the first month of
operation, on 1st May 2023, the following transactions took place. In preparation for your opening, you engage in the
following transactions on May 1,2023: 1. You contribute $50,000 in cash to start the business.2. You borrow $15,000 in
cash from the local bank. This loan will have to be repaid after 3 years.3. You purchased $18,000 worth of equipment for
use during the sessions for cash.4. You purchased an additional $9,000 worth of furniture for cash.5. You purchased
liability insurance at a total cost of $4,800. The policy is for 8 months from I May, 2023, through to 31 Dec 2023. (Hint:
Is this an expense or a prepaid expense?) The following transactions took place during May 2023DateTransactionMay3
You collected $5,000 in total from new members as the membership and music session fee for May 2023 in cash.7Rent is
paid for the month of May 2023 in cash $2500.15Grace, the qualified music trainer is paid $2,800 by cash as salary for
May 2023.21You want to promote your business, so you planned an advertising campaign costing $ 1000. Payment has
not yet been made.
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