Kohinoor Agency. operates a talent agency called Kohinoor Agency. Some clients pay in advance for services; others
Question:
Kohinoor Agency. operates a talent agency called Kohinoor Agency. Some clients pay in advance for services; others are billed after services have been performed. Advance payments are credited to an account entitled Unearned Agency Fees. Adjusting entries are performed on a monthly basis. Closing entries are performed annually on December 31. An unadjusted trial balance dated December 31, 2005, follows.
KOHINOOR AGENCY
Unadjusted Trial Balance
December 31, 2005
Cash | $22,105 | |
Fees receivable | 33,400 | |
Prepaid rent | 1600 | |
Unexpired insurance policies | 300 | |
Office supplies | 800 | |
Office equipment | 18000 | |
Accumulated depreciation-office equipment | 15000 | |
Accounts payable | 1400 | |
Note payable | 6600 | |
Income taxes payable | 3400 | |
Unearned agency fees | 9000 | |
Capital stock | 22000 | |
Retained earnings | 11800 | |
Dividends | 700 | |
Agency fees earned | 48,500 | |
Telephone expense | 580 | |
Office supply expense | 1250 | |
Depreciation expense-office equipment | 2950 | |
Rent expense | 6000 | |
Insurance expense | 1275 | |
Salaries expense | 25640 | |
Income taxes expense | 3100 | |
Total | $111,445 | $117,700 |
Other Data
- Office equipment is being depreciated over 60 months.
- At December 31, 2005, $2500 of previously unearned agency fees had been earned.
- Accrued but unrecorded and unpaid salary expense totals $1360 at December 31,2005.
- The agency pays rent quarterly (every three months). The most recent advance payment of $1800 payment was made November 1, 2005. The next payment of $2400 will be made on February 1, 2006.
- Accrued but unrecorded and uncollected agency fees earned total $3000 at December 31, 2005.
- Office supplies on hand at December 31, 2005, total $430.
- On September 1, 2005, the agency purchased a six-month insurance policy for $900.
- On December 1, 2005 the agency borrowed $6600 by signing a three-month, 9% note payable. The entire amount borrowed, plus interest, is due March 1, 2006.
- Accrued income taxes payable for the entire year ending December 31, 2005, total $3900. The full amount is due early in 2006.
Instructions:
- Prepare a 10-column work sheet for the month ended December 31, 2005.