Question: 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, 2011, follows. (Bear in mind that adjusting entries have already been made for the first 11 months of 2011, but not for December.)

Other Data
Accrued but unrecorded lesson revenue earned as of December 31, 2011, amounts to $3,200.
Records show that $800 of cash receipts originally recorded as unearned lesson revenue had been earned as of December 31.
The company purchased a 12-month insurance policy on August 1, 2011, for $4,800.
On October 1, 2011, the company paid $9,000 for rent through March 31, 2012.
Sheet music supplies on hand at December 31 amount to $200.
All music equipment was purchased when the business was first formed. Its estimated life at that time was five years (or 60 months).
On November 1, 2011, the company borrowed $5,000 by signing a three-month, 6 percent note payable. The entire note, plus three months’ accrued interest, is due on February 1, 2012.
Accrued but unrecorded salaries at December 31 amount to $3,500.
Estimated income taxes expense for the entire year totals $22,000. Taxes are due in the first quarter of 2012.
For each of the numbered paragraphs, prepare the necessary adjusting entry (including an explanation).
Determine that amount at which each of the following accounts will be reported in the company’s 2011 income statement:
Lesson Revenue Earned
Advertising Expense
Insurance Expense
Rent Expense
Sheet Music Supplies Expense
Utilities Expense
Depreciation Expense: Music Equipment
Interest Expense
Salaries Expense
Income Taxes Expense
The unadjusted trial balance reports dividends of $1,000. As of December 31, 2011, have these dividends been paid?Explain.

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  • CreatedApril 17, 2014
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