Tammy Touchtone operates a talent agency called Touchtone Talent Agency. Some clients pay in advance for services;
Question:
Other Data
1. Office equipment is being depreciated over 60 months (five years).
2. At December 31, current year, $2,500 of previously unearned agency fees had been earned.
3. Accrued but unrecorded and unpaid salary expense totals $1,360 at December 31, current year.
4. The agency pays rent quarterly (every three months). The most recent advance payment of
$1,800 was made November 1, current year. The next payment of $1,800 will be made on February 1, next year.
5. Accrued but unrecorded and uncollected agency fees earned total $3,000 at December 31, current year.
6. Office supplies on hand at December 31, current year, total $530.
7. On September 1, current year, the agency purchased a six-month insurance policy for $750.
8. On December 1, current year, the agency borrowed $6,000 by signing a 3-month, 9 percent note payable. The entire amount borrowed, plus interest, is due March 1, next year.
9. Accrued income taxes payable for the entire year ending December 31, current year, total $3,900. The full amount is due early in the next year.
Instructions
a. Prepare the necessary adjusting journal entries on December 31, current year. Also prepare an adjusted trial balance dated December 31, current year.
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, current year. Also prepare the company's balance sheet dated December 31, current year.
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 agency's monthly office rent remained the same throughout the year? If not, has it gone up or down? Explain.
g. Has the agency's monthly insurance expense remained the same throughout the year? If not, has it gone up or down? Explain.
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...
Step by Step Answer:
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-1259692406
18th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello