Shannon Burns enjoys listening to all types of music and owns countless CDs and tapes. Over the

Question:

Shannon Burns enjoys listening to all types of music and owns countless CDs and tapes. Over the years, Shannon has gained a local reputation for knowledge of music from classical to rap and the ability to put together sets of recordings that appeal to all ages.

During the last several months, Shannon served as a guest disc jockey on a local radio station. In addition, Shannon has entertained at several friends' parties as the host deejay.

On April 1, 2006, Shannon established a proprietorship known as Dancin Music.

Using an extensive collection of CDs and tapes, Shannon will serve as a disc jockey on a fee basis for weddings, college parties, and other events. During April, Shannon entered into the following transactions:

April 1. Deposited $7,000 in a checking account in the name of Dancin Music.

2. Received $2,000 from a local radio station for serving as the guest disc jockey for April.

April 2. Agreed to share office space with a local real estate agency, Folsom Realty.

Dancin Music will pay one-fourth of the rent. In addition, Dancin Music agreed to pay a portion of the salary of the receptionist and to pay onefourth of the utilities. Paid $1,000 for the rent of the office.

4. Purchased supplies (blank cassette tapes, poster board, extension cords, etc.) from Rockne Office Supply Co. for $350. Agreed to pay $100 within 10 days and the remainder by May 3, 2006.

6. Paid $600 to a local radio station to advertise the services of Dancin Music twice daily for two weeks.

8. Paid $650 to a local electronics store for renting digital recording equipment.

12. Paid $200 (music expense) to Rocket Music for the use of its current music demos to make various music sets.

13. Paid Rockne Office Supply Co. $100 on account.

16. Received $150 from a dentist for providing two music sets for the dentist to play for her patients.

22. Served as disc jockey for a wedding party. The father of the bride agreed to pay $1,200 the 1st of May.

25. Received $500 from a friend for serving as the disc jockey for a cancer charity ball hosted by the local hospital.

29. Paid $240 (music expense) to Score Music for the use of its library of music demos.

30. Received $900 for serving as disc jockey for a local club's monthly dance.

30. Paid Folsom Realty $400 for Dancin Music's share of the receptionist's salary for April.

30. Paid Folsom Realty $300 for Dancin Music's share of the utilities for April.

30. Determined that the cost of supplies on hand is $170. Therefore, the cost of supplies used during the month was $180.

30. Paid for miscellaneous expenses, $150.

30. Paid $500 royalties (music expense) to Federated Clearing for use of various artists' music during the month.

30. Withdrew $250 of cash from Dancin Music for personal use.

Instructions

1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:

Explain the nature of each increase and decrease in owner's equity by an appropriate notation at the right of the amount.
2. Prepare an income statement for Dancin Music for the month ended April 30, 2006.
3. Prepare a statement of owner's equity for Dancin Music for the month ended April 30, 2006.
4. Prepare a balance sheet for Dancin Music as of April 30,2006.

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...