QUESTION 3 (43 marks) Samson Studio is a studio for clients to use for photos shots....

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QUESTION 3 (43 marks) Samson Studio is a studio for clients to use for photos shots. Adjusting entries are performed on a monthly basis and closing entries are prepared annually on December 31. An unadjusted trial balance dated December 31, 2021, is shown below. Samson Studio Unadjusted Trial Balance December 31, 2021 Debit $155,850 $244,200 $12,000 S1,500 $270,000 Credit Cash Accounts receivable Studio supplies Prepaid insurance Recording equipment Accumulated depreciation: recording equipment Income taxes payable Unearned studio revenue Share capital Retained earnings Studio revenue earned Salaries expense Studio supplies expense Insurance expense $157,500 $53,700 $28,800 $240,000 S114,000 $323,400 Depreciation expense: recording equipment Studio rent expense Utilities expense Income taxes expense $54,000 $3,600 $3,000 $49,500 S63,000 $7,050 $53,700 $917.400 $917.400 The data needed to determine adjusting entries at December 31, 2021 are as follows: 1) The records show that $13,200 in studio revenue had not yet been billed or recorded as of December 31. 2) Studio supplies on hand at December 31 amounts to $9,900. 3) On August 1, 2021, the studio purchased a six-month insurance policy for $4,500. The entire premium was initially debited to Prepaid Insurance. 4) The company purchased all of its recording equipment when it first began business At that time, the recording equipment's estimated useful life was five years. Samson adopts the straight-line method of depreciation. 5) Records show that $10,800 of cash receipts originally recorded as Unearned Studio Revenue had been eamed as of December 31. 6) Estimated income taxes expense for the entire year in 2021 totals $58,800. Taxes are due to pay on May 31, 2022. 7) Dividends in 2021 in the amount of $5,000 is declared on December 31, 2021 and will be paid on March 1, 2022 In addition to those account titles listed on the Unadjusted Trial Balance, the chart of accounts for Samson Studio also contains the following account titles: Dividends and Dividends Payable. Required: (a) For each of the numbered paragraphs (1 to 7), prepare the necessary adjusting entries as of December 31, 2021. (Explanation of Joumal Entry is not required) (21 marks) (b) Determine the amounts and their normal balances (either Dr or Cr) to be reported in Samson Studio's year-end adjusted trial balance dated December 31, 2021 for each of the following accounts. Show workings. (12 marks) (1) Accounts receivable (ii) Studio supplies (i) Studio revenue earned (e) By how much did Samson Studio's retained earnings increase or decrease as a result of the adjusting entries performed in part a? Show workings. (5 marks) (d) The company purchased all of its recording equipment when it first began business, for how many months has the equipment been in business as of December 31, 2021. Explain your answer and show workings. (5 marks) -End of Section B- QUESTION 3 (43 marks) Samson Studio is a studio for clients to use for photos shots. Adjusting entries are performed on a monthly basis and closing entries are prepared annually on December 31. An unadjusted trial balance dated December 31, 2021, is shown below. Samson Studio Unadjusted Trial Balance December 31, 2021 Debit $155,850 $244,200 $12,000 S1,500 $270,000 Credit Cash Accounts receivable Studio supplies Prepaid insurance Recording equipment Accumulated depreciation: recording equipment Income taxes payable Unearned studio revenue Share capital Retained earnings Studio revenue earned Salaries expense Studio supplies expense Insurance expense $157,500 $53,700 $28,800 $240,000 S114,000 $323,400 Depreciation expense: recording equipment Studio rent expense Utilities expense Income taxes expense $54,000 $3,600 $3,000 $49,500 S63,000 $7,050 $53,700 $917.400 $917.400 The data needed to determine adjusting entries at December 31, 2021 are as follows: 1) The records show that $13,200 in studio revenue had not yet been billed or recorded as of December 31. 2) Studio supplies on hand at December 31 amounts to $9,900. 3) On August 1, 2021, the studio purchased a six-month insurance policy for $4,500. The entire premium was initially debited to Prepaid Insurance. 4) The company purchased all of its recording equipment when it first began business At that time, the recording equipment's estimated useful life was five years. Samson adopts the straight-line method of depreciation. 5) Records show that $10,800 of cash receipts originally recorded as Unearned Studio Revenue had been eamed as of December 31. 6) Estimated income taxes expense for the entire year in 2021 totals $58,800. Taxes are due to pay on May 31, 2022. 7) Dividends in 2021 in the amount of $5,000 is declared on December 31, 2021 and will be paid on March 1, 2022 In addition to those account titles listed on the Unadjusted Trial Balance, the chart of accounts for Samson Studio also contains the following account titles: Dividends and Dividends Payable. Required: (a) For each of the numbered paragraphs (1 to 7), prepare the necessary adjusting entries as of December 31, 2021. (Explanation of Joumal Entry is not required) (21 marks) (b) Determine the amounts and their normal balances (either Dr or Cr) to be reported in Samson Studio's year-end adjusted trial balance dated December 31, 2021 for each of the following accounts. Show workings. (12 marks) (1) Accounts receivable (ii) Studio supplies (i) Studio revenue earned (e) By how much did Samson Studio's retained earnings increase or decrease as a result of the adjusting entries performed in part a? Show workings. (5 marks) (d) The company purchased all of its recording equipment when it first began business, for how many months has the equipment been in business as of December 31, 2021. Explain your answer and show workings. (5 marks) -End of Section B-

Answer rating: 100% (QA)

a Adjusting Entries Paragraph Genera Debit Credit No Journal 1 Ac... View the full answer