C5-1 (Algo) Recording Transactions and Adjustments, Reconciling Items, and Preparing Financial Statements LO 2-2, 2-4, 2-5, 3-3, 3-5, 4-2, 4-3, 4-4, 5-4, 5-5 (General Ledger) On January 1, Pulse Recording Studio (PRS) had the following account balances. The following transactions occurred during January. a. Received $2,440 cash on 1/1 from customers on account for recording services completed in December. b. Wrote checks on 1/2 totaling $4,370 for amounts owed on account at the end December. c. Purchased and received supplies on account on 1/3, at a total cost of $200. d. Completed $4,000 of recording sessions on 1/4 that customers had paid for in advance in December. e. Received $4,850 cash on 1/5 from customers for recording sessions started and completed in January. f. Wrote a check on 1/6 for $4,000 for an amount owed on account. g. Converted $1,030 of cash equivalents into cash on 1/7. h. On 1/15, completed EFTs for $1,420 for employees' salaries and wages for the first half of January. i. Received $2,970 cash on 1/31 from customers for recording sessions to start in February. 1. Prepare journal entries for the January transactions. Review the 'General Ledger' and the unadjusted 'Trial Balance' Tabs to see the effect of the transactions on the account balances. 2. Prepare journal entries for items (j)(n) from the bank reconciliation. 1. The bank deducted $480 for an NSF check from a customer deposited on January 5 . k. The check written January 6 has not cleared the bank, but the January 2 payment has cleared. 1. The cash recelved and deposited on January 31 was not processed by the bank until February 1 . m. The bank added $5 cash to the account for interest earned in January. n. The bank deducted $5 for service charges. 3. Prepare adjusting journal entries on 1/31 in 'General Journar Tab. (these are shown as items 15 to 21). o. Depreciotion for the month is $190 p. Salaries and wages totaling $1,600 have not yet been recorded for January 16 to 31 . q. Prepoid Rent will be fully used up by March 31. 2. Supplies on hand at January 31 were $200. s. Recelved $200 invoice for January electricity charged on account to be paid in February but is not yet recorded. 1. Interest on the promissory note of $33 for January has not yet been recorded or paid. u. Income tax of $1,200 on January income has not yet been recorded or paid. 4. Review the adjusted 'Trial Balance' as of January 31. 5. Prepare an income statement for the period ended January 31 in the Income Statement' Tab. 6. Prepare a bank reconciliation in the 'Bank Reconciliation' Tab. 7. Prepare a classified balance sheet as of January 31 in the 'Balance Sheet' Tab. 3. Using the information from the requirements above, complete the 'Analysis' tab. 1 Received $2,440 cash on 1/1 from customers on account for recording services completed in December. Record the transaction. 2 Wrote checks on 1/2 totaling $4,370 for amounts owed on account at the end of December. Record the transaction. 3 Purchased and received supplies on account on 1/3, at a total cost of $200. Record the transaction. 4 Completed $4,000 of recording sessions on 1/4 that customers had paid for in advance in December. Record the transaction. Note : = journal entry has been entered 5 Received $4,850 cash on 1/5 from customers for recording sessions started and completed in January. Record the transaction. 6 Wrote a check on 1/6 for $4,000 for an amount owed on account. Record the transaction. 7 Converted $1,030 of cash equivalents into cash on 1/7. Record the transaction. 8 On 1/15, completed EFTs for $1,420 for employees' salaries and wages for the first half of January. Record the transaction. 9 Received $2,970 cash on 1/31 from customers for recordina sessions to start in Februarv. Record the Note : = journal entry has been entered The bank deducted $480 for an NSF check from a customer deposited on January 5. Record the transaction. 11 The check written January 6 has not cleared the bank, but the January 2 payment has cleared. Record the transaction. 12 The cash received and deposited on January 31 was not processed by the bank until February 1. Record the transaction. 13 The bank added $5 cash to the account for interest earned in January. Record the transaction. 14 The bank deducted $5 for service charges. Record the traneantion Note : = journal entry has been entered 14 The bank deducted $5 for service charges. Record the transaction. 15 Depreciation for the month $190. Record the transaction. 16 Salaries and wages totaling $1,600 have not yet been recorded for January 1631. Record the transaction. 17. Prepaid Rent will be fully used up by March 31. Record the transaction. 18 Supplies on hand at January 31 were $200. Record the transaction. 19 Received $200 invoice for January electricity charged on 17 Prepaid Rent will be fully used up by March 31 . Record the transaction. 18 Supplies on hand at January 31 were $200. Record the transaction. 19 Received $200 invoice for January electricity charged on account to be paid in February but is not yet recorded. Record the transaction. 20 Interest on the promissory note of $33 for January has not yet been recorded or paid. Record the transaction. 21 Income tax of $1,200 on January income has not yet been recorded or paid. Record the transaction. Note : = journal entry has been entered \begin{tabular}{|l|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Cash } \\ \hline No. & Date & Debit & Credit & Balance \\ \hline & January 01 & & & 3,720 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Cash Equivalents } \\ \hline No. & Date & Debit & Credit & Balance \\ \hline & January 01 & & & 1,700 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Supplies } \\ \hline No. & Date & Debit & Credit & Balance \\ \hline & January 01 & & & 520 \\ \hline \end{tabular} \begin{tabular}{|l|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Equipment } \\ \hline No. & Date & Debit & Credit & \multicolumn{1}{|c|}{ Balance } \\ \hline & January 01 & & & 29,400 \\ \hline \end{tabular} \begin{tabular}{|l|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Accumulated Depreciation-Equipment } \\ \hline No. & Date & Debit & Credit & Balance \\ \hline & January 01 & & & 6,500 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Accounts Payable } \\ \hline No. & Date & Debit & Credit & Balance \\ \hline & January 01 & & & 8,500 \\ \hline \end{tabular} \begin{tabular}{|r|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Deferred Revenue } \\ \hline No. & Date & Debit & Credit & Balance \\ \hline & January 01 & & & 4,000 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Notes Payable (long-term) } \\ \hline No. & Date & Debit & Credit & Balance \\ \hline & January 01 & & & 12,300 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Common Stock } \\ \hline No. & Date & Debit & Credit & Balance \\ \hline & January 01 & & & 10,600 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ Fetained Earnings } \\ \hline No. & Date & Debit & Credit & Balance \\ \hline & January 01 & & & 2.580 \\ \hline \end{tabular} Notice the dropdown below that gives the options to select the unadjusted, or adjusted trial balance. The option you choose wili be the values used to populate the income statement and balance sheet tabs. Choose the apprepriate accounts to be reported on the income statement. Select the 'adjusted' from the dropdown, which will then pogulate the balances in those accounts from the trial balance. Use the January 31 balance in Cash from General Ledger tab and the information (j) - (n) to prepare a bank reconcliation. PRS's bank reported balance of $5,770. At January 31 Calculate the current ratio at January 31. (Round your answer to 2 decimal places.) Current Ratio Indicate whether PRS has met its loan covenant that requires a minimum current ratio of 1.2. Calculate the net profit margin at January 31. (Round your answer to 2 decimal places.) Net Profit Margin % indicate whether PRS has achieved its objective of 10 percent. Balance Sheet