Comprehensive Problem: Making Paper Music Company Complete the following compreh
ID: 2450116 • Letter: C
Question
Comprehensive Problem: Making Paper Music Company
Complete the following comprehensive problem by following the accounting cycle with the exception of the worksheet. The working papers are attached and should be used to complete this problem.
Making Paper Music Company
Owner: Chris Brown
Chart of Accounts as of July 1, 2014
11 Cash $5,310
12 Accounts Receivable $1,250
14 Supplies $170
15 Prepaid Insurance $0
17 Office Equipment $0
18 Accumulated Depreciation $0
21 Accounts Payable $250
22 Wages Payable $0
23 Unearned Revenue $0
31 Chris Brown, Capital $5,000
32 Chris Brown, Drawing $500
41 Fees Earned $6,650
50 Wages Expense $400
51 Office Rent Expense $750
52 Equipment Rental Expense $700
53 Utilities Expense $300
54 Music Expense $1,590
55 Advertising Expense $450
56 Supplies Expense $180
57 Legal Expenses $0
58 Insurance Expense $0
59 Miscellaneous Expense $300
60 Depreciation Expense $0
*Accounts Payable—Mega Music Café is the vendor the $250 is owed to
*Accounts Receivable-- Wiz Kalefa is the customer’s name that owes the $1250
Post the beginning balances shown in the Chart of Accounts above in the ledgers.
Journalize and post the following transactions:
July 1: Chris Brown made an additional investment in the Making Paper Music Company by depositing $4,000 in the bank.
July 1: Procured office space near a local music store and paid the rent for July of $1,800.
July 1: Prepaid a one year insurance policy to State Farm for $2700.
July 2: Received a check from Wiz Khalifa for payment on his account, $1250.
July 3: Chris Brown signed a contract with Local Artist radio station to provide guest spots for the next three months. The contract requires Chris to provide services for 80 hours per month for $3600 (per month) and any additional hours over 80 are billed at $40 per hour.
July 3: Chris Brown receives an advance payment from Local Artist radio station in the amount of $7200 pertaining to the contract signed.
July 3: Wrote a check to Mega Music Café for the amount owed
July 4: Met with an attorney to have the contract with Local Artist Radio reviewed and paid the legal fees in full--$800
July 5: Purchased office equipment from Office Depot for $6,000 and placed on account
July 8: Paid the Atlanta Journal Constitution $200 for an advertisement in the Sunday paper
July 11: Received $900 cash for singing at a party
July 13: Paid $600 to Capricorn Records to rent some studio equipment
July 14: Paid Lil Wayne $1,200 for assisting with parties and recording
July 16: Received $1200 for singing at a party
July 18: Purchased supplies from Office Depot on account $1080
July 21: Paid $620 to Digital Music for the use of music demos
July 22: Paid $800 to Jam Time Radio Station to advertise the services of Making Paper Music Company twice daily for the remainder of the month
July 23: Sang at a party for Sean Combs and charged $2500. $750 was paid in cash on the spot and the remainder was billed in an invoice
July 27: Paid $760 to Georgia Power for the electric bill
July 28: Paid wages of $1200 to Lil Wayne for assisting with parties and recording
July 29: Paid $370 in various miscellaneous expenses
July 30: Sang at Missy Elliot’s Charity Ball and charged $1800. $400 was paid in cash on the spot and the remainder was billed in an invoice
July 31: Received $2800 for singing at a party
July 31: Paid $1400 in royalties to Motown Music for the use of others music
July 31: Chris Brown withdrew $1500 for personal bills
Prepare an Unadjusted Trial Balance for July 31, 2014
Journalize and post the following adjusting entries as of July 31, 2014
Record the accrued revenues of $1600
Supplies on hand at the end of the month $400
Adjust the prepaid insurance account for one month
Record the depreciation for the Office Equipment $75
Adjust the unearned revenue account for one month of revenues earned from Local Artist Radio
Record the accrued wages, to Lil Wayne, of $170
Prepare an Income Statement, Statement of Owner’s Equity, and a Balance Sheet as of July 31, 2014
Journalize and post the closing entries
Prepare a Post-Closing Trial Balance
Explanation / Answer
Cash Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 5310 1-Jul-14 Office Rent Expenses 1800 1-Jul-14 Chris Brown Capital 4000 1-Jul-14 Cash 2700 2-Jul-14 Accounts Receivable 1250 3-Jul-14 Accounts Payable 250 3-Jul-14 Unearned Revenues 7200 4-Jul-14 Legal Expenses 800 11-Jul-14 Unearned Revenues 900 8-Jul-14 Advertising Expenses 200 16-Jul-14 Unearned Revenues 1200 13-Jul-14 Equipment Rental Expenses 600 23-Jul-14 Fees Earned 2500 14-Jul-14 Miscelleneous expenses 1200 30-Jul-14 Fees Earned 400 21-Jul-14 Music Expenses 620 31-Jul-14 Unearned Revenues 2800 22-Jul-14 Advertising Expenses 800 28-Jul-14 Wages Expenses 1200 29-Jul-14 Miscelleneous expenses 370 31-Jul-14 Equipment Rental Expenses 1400 31-Jul-14 Chris Brown Drawing 1500 31-Jul-14 12120 25560 25560 Accounts Receivable Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 1250 2-Jul-14 Cash 1250 Supplies Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 170 31-Jul-14 Ending Balance 1250 18-Jul-14 Accounts Payable 1080 1250 1250 Prepaid Incurance Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 0 31-Jul-14 Ending Balance 2700 1-Jul-14 Cash 2700 2700 2700 Office Equipment Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 0 Accumulated Depreciation Date Account Title Debit Date Account Title Credit 31-Jul-14 Ending Balance 0 1-Jul-14 Beginning 0 Accounts Payable Date Account Title Debit Date Account Title Credit 2-Aug-14 Cash 250 1-Jul-14 Beginning 250 18-Jul-14 Supplies 1080 1330 1330 Wages Payable Date Account Title Debit Date Account Title Credit 31-Jul-14 Ending Balance 250 1-Jul-14 Beginning 250 Unearned Revenue Date Account Title Debit Date Account Title Credit 31-Jul-14 Ending Balance 4900 1-Jul-14 Beginning 0 11-Jul-14 Cash 900 16-Jul-14 Cash 1200 31-Jul-14 Cash 2800 4900 4900 Chris Brown Capital Date Account Title Debit Date Account Title Credit 31-Jul-14 Ending Balance 5000 1-Jul-14 Beginning 5000 Chris Brown Drawing Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 500 31-Jul-14 Ending Balance 2000 31-Jul-14 Cash 1500 2000 2000 Fees Earned Date Account Title Debit Date Account Title Credit 31-Jul-14 Ending Balance 10950 1-Jul-14 Beginning 6650 23-Jul-14 cash 750 23-Jul-14 Accounts Recievable 1750 30-Jul-14 cash 400 30-Jul-14 Accounts Recievable 1400 10950 10950 Wages Expenses Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 400 31-Jul-14 Ending Balance 1600 28-Jul-14 Cash 1200 1600 1600 Office Rent Expenses Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 750 31-Jul-14 Ending Balance 2550 1-Jul-14 Cash 1800 2550 2550 Equipment Rental Expenses Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 700 31-Jul-14 Ending Balance 2700 13-Jul-14 Cash 600 31-Jul-14 Cash 1400 2700 2700 Utilities expenses Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 300 31-Jul-14 Ending Balance 1060 27-Jul-14 Cash 760 1060 1060 Music Expenses Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 1590 31-Jul-14 Ending Balance 2210 21-Jul-14 Cash 620 2210 2210 Advertising Expenses Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 450 31-Jul-14 Ending Balance 1450 8-Jul-14 Cash 200 22-Jul-14 Cash 800 1450 1450 Supplies Expenses Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 180 31-Jul-14 Ending Balance Legal Expenses Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 0 31-Jul-14 Ending Balance 800 4-Jul-14 Cash 800 Insurance Expenses Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 0 Miscelleneous expenses Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 300 31-Jul-14 Ending Balance 1500 14-Jul-14 Cash 1200 1500 1500 Depreciation Expenses Date Account Title Debit Date Account Title Credit 1-Jul-14 Beginning 0 Journal Entries Date Account Title Debit Credit 1-Jul-14 Cash 4000 Chris Brown Capital 4000 1-Jul-14 Office Rent Expenses 1800 Cash 1800 2-Jul-14 Cash 1250 Accounts Receivable 1250 3-Jul-14 Unearned Revenues 7200 Cash 7200 3-Jul-14 Accounts Payable 250 Cash 250 4-Jul-14 Legal Expenses 800 Cash 800 5-Jul-14 Office Equipment 6000 Cash 6000 8-Jul-14 Advertising Expenses 200 Cash 200 11-Jul-14 Unearned Revenues 900 Cash 900 13-Jul-14 Equipment Rental Expenses 600 Cash 600 14-Jul-14 Miscelleneous expenses 1200 Cash 1200 16-Jul-14 Unearned Revenues 1200 Cash 1200 18-Jul-14 Supplies 1080 Accounts Payable 1080 21-Jul-14 Music Expenses 620 Cash 620 22-Jul-14 Advertising Expenses 800 Cash 800 23-Jul-14 Cash 750 Accounts Receivable 1750 Fees Earned 2500 27-Jul-14 Utilities expenses 760 Cash 760 28-Jul-14 Wages Expenses 1200 Cash 1200 29-Jul-14 Miscelleneous expenses 370 Cash 370 30-Jul-14 Cash 400 Accounts Receivable 1400 Fees Earned 1800 31-Jul-14 Unearned Revenues 2800 Cash 2800 31-Jul-14 Equipment Rental Expenses 1400 Cash 1400 31-Jul-14 Chris Brown Drawing 1500 Cash 1500
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