Brushstroke Art Studio Inc Provides Quality Instruction To Aspiring Artists

Brushstroke Art Studio Inc provides art instruction and adjusts its accounts monthly but closes entries annually on December 31. The document includes Brushstroke's unadjusted trial balance as of December 31 of the current year along with other financial information including supplies on hand, rent payments, equipment depreciation, a note payable taken out in October, unearned fees, accrued fees and expenses, and accrued income taxes. Instructions are given to prepare adjusting entries, adjusted trial balance, financial statements, closing entries, and after-closing trial balance using the provided information.

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Brushstroke Art Studio Inc Provides Quality Instruction To Aspiring Artists

Uploaded by

trilocksp Singh

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Download as PDF, TXT or read online on Scribd

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Brushstroke Art Studio Inc provides quality instruction to

aspiring artists

Brushstroke Art Studio, Inc., provides quality instruction to aspiring artists. The business adjusts
its accounts monthly, but performs closing entries annually on December 31. This is the studio's
unadjusted trial balance dated December 31, current year.

Other Data

1. Supplies on hand at December 31, current year, total $1,000.

2. The studio pays rent quarterly (every three months). The last payment was made November
1, current year. The next payment will be made early in February, next year.

3. Studio equipment is being depreciated over 120 months (10 years).

4. On October 1, current year, the studio borrowed $24,000 by signing a 12-month, 12 percent
note payable. The entire amount, plus interest, is due on September 30, next year.

5. At December 31, current year, $3,000 of previously unearned client fees had been earned.

6. Accrued, but unrecorded and uncollected client fees earned total $690 at December 31,
current year.

7. Accrued, but unrecorded and unpaid salary expense totals $750 at December 31, current
year.

8. Accrued income taxes expense for the entire year ending December 31, current year, total
$7,000. The full amount is due early in the next year.

Instructions

a. Prepare the necessary adjusting journal entries on December 31, current year. Prepare also
an adjusted trial balance dated December 31, current year.

b. From the adjusted trial balance prepared in part a, prepare an income statement and
statement of retained earnings for the year ended December 31, current year. Also prepare the
company's balance sheet dated December 31, current year.

c. Prepare the necessary year-end closing entries.

d. Prepare an after-closing trial balance.

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e. Has the studio's monthly rent remained the same throughout the year? If not, has it gone up
or down? Explain.