CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT} After much consideration, Cam and Anna decide to organize their company as


After much consideration, Cam and Anna decide to organize their company as a corporation. On January 1, 2018, Front Row Entertainment Inc. begins operations. Due to Cam's family connections in the entertainment industry, Cam assumes the major responsibility for signing artists to a promotion contract. Meanwhile, Anna assumes the financial accounting and reporting responsibilities. The following business activities occurred during January:
Jan. 1 Cam and Anna invested \(\$ 8,000\) each in the company in exchange for common shares.
1 The company obtained a \(\$ 25,000\) loan from a local bank. Front Row Entertainment agreed to pay annual interest of \(9 \%\) each January 1, starting in 2019. It will repay the amount borrowed in five years.
1 The company paid \(\$ 1,200\) in legal fees associated with incorporation.
1 Office equipment was purchased with \(\$ 7,000\) in cash.
1 The company paid \(\$ 800\) to rent office space for January.
3 A one-year insurance policy was purchased for \(\$ 3,600\).
3 Office supplies of \(\$ 2,500\) were purchased from Equipment Supply Services. Equipment Supply Services agreed to accept \(\$ 1,000\) in 15 days with the remainder due in 30 days.

5 The company signed Charm City, a local band with a growing cult following, to a four-city tour that starts on February 15.
8 Venues for all four Charm City concerts were reserved by paying \(\$ 10,000\) cash.
12 Advertising costs of \(\$ 4,500\) were paid to promote the concert tour.
18 Paid \(\$ 1,000\) to Equipment Supply Services for office supplies purchased on January 3.
25 To aid in the promotion of the upcoming tour, Front Row Entertainment arranged for Charm City to perform a 20 -minute set at a local festival. Front Row Entertainment earned \(\$ 1,000\) for Charm City's appearance. Of this total amount, \(\$ 400\) was received immediately with the remainder due in 15 days.
25 Paid Charm City \(\$ 800\) for performing at the festival. Note: Front Row Entertainment recorded the fees paid to the artist in an operating expense account called Artist Fee Expense.
28 Due to the success of the marketing efforts, Front Row Entertainment received \(\$ 3,800\) in advance ticket sales for the upcoming tour.
30 The company collected \(\$ 200\) of the amount due from the January 25 festival.
30 Paid salaries of \(\$ 1,200\) each to Cam and Anna.
1. Analyze and journalize the January transactions.
2. Post the transactions to T-accounts.
3. Prepare a trial balance at January 31, 2018.

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Cornerstones Of Financial Accounting

ISBN: 9780176707125

2nd Canadian Edition

Authors: Jay Rich, Jefferson Jones, Maryanne Mowen, Don Hansen, Donald Jones, Ralph Tassone

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