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 |
|||
| Line Item Description | 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 are as follows: If an amount box does not require an entry, leave it blank.
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.
| Account | Post. Ref. | Debit | Credit |
| Accounts Payable Accounts Receivable Cash Fees Earned Unearned Revenue | fill in the blank 2 | fill in the blank 3 | fill in the blank 4 |
| Accounts Payable Accounts Receivable Cash Fees Earned Unearned Revenue | fill in the blank 6 | fill in the blank 7 | fill in the blank 8 |
July 31: Supplies on hand at July 31, $275.
| Account | Post. Ref. | Debit | Credit |
| Accounts Payable Accounts Receivable Cash Supplies Supplies Expense | fill in the blank 10 | fill in the blank 11 | fill in the blank 12 |
| Accounts Payable Accounts Receivable Cash Supplies Supplies Expense | fill in the blank 14 | fill in the blank 15 | fill in the blank 16 |
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.”
| Account | Post. Ref. | Debit | Credit |
| Accounts Payable Accounts Receivable Cash Insurance Expense Prepaid Insurance | fill in the blank 18 | fill in the blank 19 | fill in the blank 20 |
| Accounts Payable Accounts Receivable Cash Insurance Expense Prepaid Insurance | fill in the blank 22 | fill in the blank 23 | fill in the blank 24 |
July 31: Depreciation of the office equipment is $50.
| Account | Post. Ref. | Debit | Credit |
| Accumulated Depreciation-Office Equipment Cash Depreciation Expense Office Equipment Office Rent Expense | fill in the blank 26 | fill in the blank 27 | fill in the blank 28 |
| Accumulated Depreciation-Office Equipment Cash Depreciation Expense Equipment Rent Expense Office Equipment | fill in the blank 30 | fill in the blank 31 | fill in the blank 32 |
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. | Debit | Credit |
| Accounts Payable Accounts Receivable Cash Fees Earned Unearned Revenue | fill in the blank 34 | fill in the blank 35 | fill in the blank 36 |
| Accounts Payable Accounts Receivable Cash Fees Earned Unearned Revenue | fill in the blank 38 | fill in the blank 39 | fill in the blank 40 |
July 31: Accrued wages as of July 31 were $140.
| Account | Post. Ref. | Debit | Credit |
| Accounts Payable Cash Peyton Sharpe, Drawing Wages Expense Wages Payable | fill in the blank 42 | fill in the blank 43 | fill in the blank 44 |
| Accounts Payable Cash Peyton Sharpe, Drawing Wages Expense Wages Payable | fill in the blank 46 | fill in the blank 47 | fill in the blank 48 |
Continuing Problem
Chapter 3 – Instruction #2
Post the adjusting entries completed in Chapter 3 Part 1 to the ledgers in the spreadsheet you saved in Chapter 2 Part 3. Extend the account balance to the appropriate balance column after each posting. Be sure to save your work in the spreadsheet.
Chapter 3 – Instruction #3
Refer to the spreadsheet you updated in Chapter 3 Part 2 to prepare an adjusted trial balance.
Note: Be sure to save this part with a screen shot or print it out. You will need to refer to your adjusted trial balance to complete the financial statements in Chapter 4 Part 1 of the continuing problem.
If an amount box does not require an entry, leave it blank.
| PS Music Adjusted Trial Balance July 31, 20Y5 |
||
| Line Item Description | Debit Balances |
Credit Balances |
| Accounts Payable Cash Common Stock Fees Earned Unearned Revenue | fill in the blank 2 | fill in the blank 3 |
| Accounts Payable Accounts Receivable Common Stock Fees Earned Unearned Revenue | fill in the blank 5 | fill in the blank 6 |
| Accounts Payable Common Stock Fees Earned Supplies Unearned Revenue | fill in the blank 8 | fill in the blank 9 |
| Accounts Payable Common Stock Fees Earned Prepaid Insurance Unearned Revenue | fill in the blank 11 | fill in the blank 12 |
| Accounts Payable Common Stock Fees Earned Office Equipment Unearned Revenue | fill in the blank 14 | fill in the blank 15 |
| Accounts Payable Accumulated Depreciation-Office Equipment Common Stock Fees Earned Unearned Revenue | fill in the blank 17 | fill in the blank 18 |
| Accounts Payable Accounts Receivable Cash Supplies Expense Wages Expense | fill in the blank 20 | fill in the blank 21 |
| Accounts Receivable Cash Supplies Expense Wages Expense Wages Payable | fill in the blank 23 | fill in the blank 24 |
| Accounts Receivable Cash Music Expense Unearned Revenue Wages Expense | fill in the blank 26 | fill in the blank 27 |
| Accounts Receivable Cash Common Stock Music Expense Wages Expense | fill in the blank 29 | fill in the blank 30 |
| Accounts Receivable Cash Dividends Music Expense Wages Expense | fill in the blank 32 | fill in the blank 33 |
| Accounts Receivable Cash Fees Earned Music Expense Wages Expense | fill in the blank 35 | fill in the blank 36 |
| Accounts Receivable Cash Common Stock Fees Earned Wages Expense | fill in the blank 38 | fill in the blank 39 |
| Accounts Receivable Cash Common Stock Fees Earned Office Rent Expense | fill in the blank 41 | fill in the blank 42 |
| Accounts Payable Cash Common Stock Equipment Rent Expense Fees Earned | fill in the blank 44 | fill in the blank 45 |
| Accounts Payable Cash Common Stock Fees Earned Utilities Expense | fill in the blank 47 | fill in the blank 48 |
| Accounts Payable Cash Common Stock Music Expense Unearned Revenue | fill in the blank 50 | fill in the blank 51 |
| Accounts Payable Advertising Expense Cash Common Stock Unearned Revenue | fill in the blank 53 | fill in the blank 54 |
| Accounts Payable Cash Common Stock Supplies Expense Unearned Revenue | fill in the blank 56 | fill in the blank 57 |
| Accounts Payable Cash Common Stock Insurance Expense Unearned Revenue | fill in the blank 59 | fill in the blank 60 |
| Accounts Payable Cash Common Stock Depreciation Expense Unearned Revenue | fill in the blank 62 | fill in the blank 63 |
| Accounts Payable Cash Common Stock Miscellaneous Expense Unearned Revenue | fill in the blank 65 | fill in the blank 66 |
| fill in the blank 67 | fill in the blank 68 | |
