Tammy Touchtone operates a talent agency called Touchtone Talent Agency. Some clients pay in advance for services; others are billed
Tammy Touchtone operates a talent agency called Touchtone Talent 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, 2011, follows. (Bear in mind that adjusting entries have already been made for the first 11 months of 2011, but not for December.)
1. Office equipment is being depreciated over 60 months (5 years).
2. At December 31, 2011, $2,500 of previously unearned agency fees had been earned.
3. Accrued but unrecorded and unpaid salary expense totals $1,360 at December 31, 2011.
4. The agency pays rent quarterly (every three months). The most recent advance payment of $1,800 was made November 1, 2011. The next payment of $1,800 will be made on February 1, 2012.
5. Accrued but unrecorded and uncollected agency fees earned total $3,000 at December 31, 2011.
6. Office supplies on hand at December 31, 2011, total $530.
4. On September 1, 2011, the agency purchased a six-month insurance policy for $750.
8. On December 1, 2011, the agency borrowed $6,000 by signing a three-month, 9 percent note payable. The entire amount borrowed, plus interest, is due March 1, 2012.
9. Accrued income taxes payable for the entire year ending December 31, 2011, total $3,900.
10. The full amount is due early in 2012.
a. Prepare the necessary adjusting journal entries on December 31, 2011. Also prepare an adjusted trial balance dated December 31, 2011.
b. From the adjusted trial balance prepared in part a, prepare an income statement and statement of retained earnings for the year ended December 31, 2011. Also prepare the companyâ€™s balance sheet dated December 31, 2011.
c. Prepare the necessary year-end closing entries.
d. Prepare an after-closing trial balance.
e. Assume that the agency purchased all of its office equipment when it first began business activities. For how many months has the agency been in operation?
f. Has the agencyâ€™s monthly office rent remained the same throughout the year? If not, has it gone up or down? Explain.
g. Has the agencyâ€™s monthly insurance expense remained the same throughout the year? If not, has it gone up or down?Explain.Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
This problem has been solved!
Step by Step Answer: