Question

Heading 2 Paragraph H Question #1 (40 marks) Styles Company A's business involves hosting several concerts per year. The company's year end is December 31, 2021. The company records all prepaid costs as assets and all un earned revenues as liabilities and adjusts accounts annually. 1. Prepaid supplies amounted to $835 on December 31, 2020. On June 10, 2021, additional supplies were purchased for S1,890 cash. On December 31, 2021, a physical count showed that prepaid supplies amounted to $940. 2. Purchased equipment on August 1, 2021, for $50,400 cash. The equipment was estimated to have a seful life of 12 year. The company's policy is to employ the straight-line method and depreciation is rounded to the nearest month 3. The company puts on eight concerts each season. Season tickets sell for 5430 each and 225 sold in July for the upcominz 2001- 2022 season, which begins in September 2021 and ends in April 2022 (one concert per month) The company credited Uneamed Revenue for the full amount received, 4. Every Wednesday, the total payroll is $5,520 for salaries earned during the previous workweek (Monday-Friday). Salaries were last paid on Wednesday, December 29. This year, December 31 falls on a Friday. 5. The company also rents the space to a local children's choir, which uses the space for rehearsals twice a week at a rate of 5740 per month. The choir was short of cash at the beginning of December and sent the company a cheque for $340 ce December 10, and 1 promise to pay the balance in January. On January 10, 2022, the company received a cheque for the balance away from December. At this time, the January rent was also paid. 6. On June 1, 2021, the company borrowed $24,000 from its bank at an annual interest rate of 5.0%. The principal and interest are to be repaid on May 30, 2022. 7. Upon reviewing its accounting records on December 31, 2021, the company noted that the telephone bill for theme of December had not yet been received A call to the phone company determined that the December telephone bill was $530 The bid was paid on January 12, 2021 a) Prepare the journal entries to record the 2021 transactions for itens 1 through 6. b) Prepare the year end adjusting entry for items 1 through 7. W

Answer 1

A)

	DATE	GENERAL JOURNAL	DEBIT	CREDIT
	2021
1	JUNE 10	SUPPLIES	$1,890
		CASH		$1,890
		(SUPPLIES PURCHASED)
2.	AUG 1	EQUIPMENT	$50,400
		CASH		$50,400
		(PURCHSED EQIPMENT FOR CASH)
3	JULY	CASH (430 *225)	$96,750
		UNEARNED REVENUE		$96,750
		(UNERNED REVENUE RECIEVED)
4	DEC 29	SALARIES AND WAGES EXPENSES	$5,520
		CASH		$5,520
		(SALARIES PAID)
5	DEC 10	RENT EXPENSES	$540
		CASH		$540
		(RENT EXPENSES PAID)
6	JUNE 1	CASH	$24,000
		BANK LOAN		$24,000
		(CASH RECIVED FROM LOAN)

(B)

DATE

GENERAL JOURNAL

DEBIT

CREDIT

DEC 31,2021	SUPPLIES EXPENSES	$1,785
	SUPPLIES		$1,785
	(SUPPLIES USED)
DEC 31,2021	DEPRECIATION EXPENSES	$1,750
	ACCUMULATED DEPRECIATION		$1,750
	(DEPRECIATION CHARGED ON EQUIPMENT)
DEC 31,2021	UNEARNED REVENUE	48,375
	SERVICE REVENUE		48,375
	(SERVICE REVENUE EARNED DURING THIS YEAR)
DEC 31,2021	SALARIES AND WAGES EXPENSES	$5,520
	TO SALARIES PAYABLE		$5,520
	(SALARIES ACCRUED DURING YEAR)
DEC 31,2021	RENT EXEPNSES	$200
	RENT PAYABLE		$200
	(RENT EXPENSES PAYABLE)
DEC 31,2021	INTREST EXEPNSES	$700
	INTEREST PAYABLE		$700
	(INTEREST EXPENSES ACCRUED)
DEC31,2021	TELEPHONE EXPENSES	$530
	TELEPHONE EXPENSES PAYABLE		$530
	(TELEPHONE EXPENSES PAYABLE)

WORKING NOTES:

1.SUPPLIES EXPENSES = $835 + $1,890 - $940

= $1,785

2.DEPRECIATION = $50,400/12 = $4200 PER YEAR

DEPRECAITION FOR 5 MONTH (AUG TO DEC) = 4200*5/12 = $1,750

3.EIGHT CONCERTS(ONE CONECRT PER MONTH ) = FEES RECIEVED = 96,750

CONCERT HELD IN THIS YEAR (SEP TO DEC ) =4 SO FEES EARNED = 96,750*4/8 = 48,375

4.PAYROLL PAYABLE 5,520 OF FULL WEEK.

5.RENT PAYABLE = 740 -540 = 200

6. INTREST = $24,000 * 5% * 7MONTH/12 MONTHS

= $700