Crimson Tide Music Academy offers lessons in playing a wide range of musical ins

Question

Crimson Tide Music Academy offers lessons in playing a wide range of musical instruments. The unadjusted trial balance as of December 31, 2018, appears below. December 31 is the company's fiscal year-end.

   

Information necessary to prepare the year-end adjusting entries appears below.

a. Depreciation of equipment for the year is $5,000.

b. Accrued salaries at year-end should be $1,600.

c. Crimson Tide borrows $15,000 on September 1, 2018. The principal is due to be repaid in four years. Interest is payable each August 31 at an annual rate of 10%.

d. Unused supplies at year-end total $600. Crimson Tide debits Supplies at the time supplies are purchased.

e. Crimson Tide opens a second studio by paying for one year of rent in advance on April 1, 2018, for $6,000 ($500 per month) debiting Prepaid Rent.

f. Unpaid utilities for December total $100.

Required:

Record the necessary adjusting entries on December 31, 2018. (If no entry is required for a particular transaction/event, select "No journal entry required" in the first account field.)

  Accounts Debits Credits   Cash $ 9,300   Accounts Receivable 8,500   Supplies 1,500   Prepaid Rent 6,000   Equipment 75,000   Accumulated Depreciation $ 10,000   Accounts Payable 6,700   Salaries Payable 0   Interest Payable 0   Utilities Payable 0   Notes Payable 15,000   Common Stock 35,000   Retained Earnings 14,000   Service Revenue 45,000   Salaries Expense 23,500   Interest Expense 0   Rent Expense 0   Supplies Expense 0   Utilities Expense 1,900   Depreciation Expense 0         Totals $ 125,700 $ 125,700

Explanation / Answer

No Accounts title and explanation Debit Credit a Depreciation expense $    5,000 Accumulated depreciation $    5,000 b Salaries expense $    1,600 Salaries payable $    1,600 c Interest expense $        500 (15000 x 10% x 4/12) Interest payable $        500 d Supplies expense $        900 (1500 - 600) Supplies $        900 e Rent expense $    4,500 (500 x 9) Prepaid rent $    4,500 f Utilities expense $        100 Utilities payable $        100

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