Financial Accounting Homework 1

Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit

Homework 1

Problem 2-55A Comprehensive Problem

Western Sound Studios records and masters audio recordings of popular artists in live concerts. The performers use the recordings to prepare "live" songs for download. The following account balances were available at the beginning of the year:

Accounts Pavable                                 $ 11,900

Accounts Receivable                              384,000

Cash                                                     16,300

Common Stock                                     165,000

Insurance Pavable                                    1,000

Interest Payable                                     11,200

Notes Payable (Long-term)                    100,000

Rent Payable (Building)                           10,000

Retained Earnings, January 1                 101,200

During the year, the following transactions occurred (the events described below are aggrega tions of many individual events):

a. Recording services in the amount of $994,000 were billed.

b. The accounts receivable at the beginning of the year were collected.

c. In addition, cash for $983,000 of the services billed in Transaction a was collected.

d. The rent payable for the building was paid. In addition, $48,000 of building rental costs was paid in cash. There was no rent payable or prepaid rent at year-end.

e. The insurance payable on January 1 was paid. In addition, $4,000 of insurance costs was paid in cash. There was no insurance payable or prepaid insurance at year-end.

f. Utilities expense of $56,000 was incurred and paid during the year.

g. Salaries expense for the year was $702,000. All $702,000 was paid during the year.

h. The interest payable at January I was paid. During the year, an additional $11,000 of interest was paid. At year-end no interest was payable.

i.Income taxes for the year in the amount of $19,700 were incurred and paid.

Required:

1. Establish a T-account for the accounts listed above and enter the beginning balances. Use a chart of accounts to order the T-accounts.

2. Analyze each transaction. Journalize as appropriate. (Note: Ignore the date because these events are aggregations of individual events.)

3. Post your journal entries to the T-accounts. Add additional T-accounts when needed.

4. Use the ending balances in the T-accounts to prepare a trial balance.

Mark allocation: