Melody Lane Co. provides music lessons to many clients across the city. The following information is available to be used in recording annual adjusting entries at the company’s September 30, 2024, year end:
1. On September 30, 2023, the company had a balance of $2,080 in its Supplies account. Additional supplies were purchased during the year totalling $1,700. The supplies inventory on September 30, 2024, amounts to $810.
2. On November 1, 2023, Melody Lane purchased a one-year insurance policy for $3,200.
3. On January 2, 2024, a client paid $1,800 for six months of lessons starting April 2, 2024.
4. On February 1, 2024, Melody Lane purchased a grand piano (to be used in music lessons) for $24,000. The piano’s estimated useful life is 12 years.
5. On May 1, 2024, Melody Lane borrowed $25,000 from the bank and signed a 10-month, 4% note payable. Interest and principal are to be paid at maturity.
6. On August 1, 2024, Melody Lane signed a contract with a neighbourhood school to provide weekly piano lessons to some of its students for a fee of $2,000 per month. The contract called for lessons to start the beginning of September. The school has not yet been sent an invoice for the entire month of September.
7. On August 15, 2024, the company paid $9,000 to Pinnacle Holdings to rent additional studio space for nine months starting September 1. Melody Lane recorded the full payment as Prepaid Rent.
8. Melody Lane’s instructors have earned salaries of $3,500 for the last week of September 2024. This amount will be paid to the instructors on the next payday in October.
9. Music lessons were provided to a local church group for $1,500 on September 30, 2024. Melody Lane has not yet invoiced the group or recorded the transaction.
10. In early October 2024, Melody Lane received an invoice for $895 from the utility company for September utilities. The amount has not yet been recorded or paid.

Instructions
Prepare the adjusting entries.

Taking It Further

Is it better to prepare monthly adjusting entries or annual adjusting entries as Melody Lane does? Why?