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Marvelous Music Provides Music Lessons To Student Musicians Some Students

Marvelous Music provides music lessons to students. Some students pay in advance for lessons, which are credited to an Unearned Lesson Revenue account. Adjusting entries are made monthly to account for lessons provided. An unadjusted trial balance is provided for December 31, along with additional financial information requiring adjusting entries.

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0% found this document useful (2 votes)

326 views2 pages

Marvelous Music Provides Music Lessons To Student Musicians Some Students

Uploaded by

trilocksp Singh

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as PDF, TXT or read online on Scribd

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Marvelous Music provides music lessons to student

musicians Some students

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 Unearned Lesson Revenue. Adjusting entries are performed on a monthly
basis. An unadjusted trial balance dated December 31, year 1, follows. (Bear in mind that
adjusting entries have already been made for the first 11 months of year 1, but not for
December.)

Other Data

1. Accrued but unrecorded lesson revenue earned as of December 31, year 1, amounts to
$3,200.

2. Records show that $800 of cash receipts originally recorded as unearned lesson revenue had
been earned as of December 31.

3. The company purchased a 12-month insurance policy on August 1, year 1, for $4,800.

4. On October 1, year 1, the company paid $9,000 for rent through March 31, year 2.

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, year 1, 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 1, year 2.

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 year 2.

Instructions

a. For each of the numbered paragraphs, prepare the necessary adjusting entry (including an
explanation).

b. Determine that amount at which each of the following accounts will be reported in the
company's year 1 income statement.

Unlock answers here solutiondone.online

1. Lesson Revenue Earned

2. Advertising Expense

3. Insurance Expense

4. Rent Expense

5. Sheet Music Supplies Expense

6. Utilities Expense

7. Depreciation Expense: Music Equipment

8. Interest Expense

9. Salaries Expense

10. Income Taxes Expense

c. The unadjusted trial balance reports dividends of $1,000. As of December 31, year 1, have
these dividends been paid? Explain.