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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Chapter 3 - Instruction #1

The unadjusted trial balance for PS Music as of July 31, 20Y5 is as follows:

PS Music Unadjusted Trial Balance July 31, 20Y5
	Account No.	Debit Balances	Credit Balances
Cash	11	9,945
Accounts Receivable	12	2,750
Supplies	14	1,020
Prepaid Insurance	15	2,700
Office Equipment	17	7,500
Accounts Payable	21		8,350
Unearned Revenue	23		7,200
Common Stock	31		9,000
Dividends	33	1,750
Fees Earned	41		16,200
Wages Expense	50	2,800
Office Rent Expense	51	2,550
Equipment Rent Expense	52	1,375
Utilities Expense	53	1,215
Music Expense	54	3,610
Advertising Expense	55	1,500
Supplies Expense	56	180
Miscellaneous Expense	59	1,855
		40,750	40,750

Based on those balances and the additional data below, prepare adjusting journal entries. Include Posting References, using the account numbers in your spreadsheet. You will need the following additional accounts:

Account #	Account Name
18	Accumulated Depreciation-Office Equipment
22	Wages Payable
57	Insurance Expense
58	Depreciation Expense

The data needed to determine adjustments for the two-month period ending July 31, 20Y5, are as follows:

July 31: During July, PS Music provided guest disc jockeys for KXMD for a total of 115 hours. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of $3,600, which PS Music has already received payment for. Any additional hours beyond 80 will be billed to KXMD at $40 per hour.

month for a monthly fee of $3,600, which PS Music has already received payment for. Any additional hours beyond 80 will be billed to KXMD at $40 per hour.
Account
July 31: Supplies on hand at July 31, $275.
Account
Post. Ref.
Account
Post. Ref.
Post. Ref.
Debit
July 31: Depreciation of the office equipment is $50.
Debit
July 31: The balance of the prepaid insurance account relates to the following July 1, 20Y5 transaction: "Paid a premium of $2,700 for a comprehensive insurance policy
covering liability, theft, and fire. The policy covers a one-year period."
Credit
Debit
Credit
Credit

July 31: Depreciation of the office equipment is $50.
Account
Account
Post. Ref.
July 31: The balance of the unearned revenue account relates to the contract between PS Music and KXMD, described in the July 3, 20Y5 transaction, which included the
following: "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." In accordance with the contract, Peyton received $7,200 from KXMD as an advance payment for
the first two months.
Account
Post. Ref.
July 31: Accrued wages as of July 31 were $140.
Debit
Post. Ref.
Debit
Credit
Debit
Credit
Credit

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