Question
Cam and Anna are very satisfied with their first month of operations. Their major effort centered on signing various artists to live performance contracts, and
Cam and Anna are very satisfied with their first month of operations. Their major effort centered on signing various artists to live performance contracts, and they had more success than they had anticipated. In addition to Charm City, they were able to use their contacts in the music industry to sign 12 other artists. With the tours starting in February, Cam and Anna were eager to hold their first big event. Over the next month, the following transactions occurred.
At the end of February, Cam and Anna felt like their business was doing well; however, they decided that they needed to prepare financial statements to better understand the operations of the business. Anna gathered the following information relating to the adjusting entries that needed to be prepared at the end of February.
Two months of interest on the note payable is accrued. The interest rate is 9%.
A count of the supplies revealed that $1,825 of supplies remained on hand at the end of February.
Two months of the annual insurance has expired.
Depreciation related to the office equipment was $180 per month.
The rental of the venues for all four Charm City concerts was paid in advance on January 8. As of the end of February, Charm City has performed two of the four concerts in the contract.
An analysis of the unearned sales revenue account reveals that $8,175 of the balance relates to concerts that have not yet been performed.
Neither Cam nor Anna have received their salary of $1,200 each for February.
A utility bill of $435 relating to utility service on Front Row's office for January and February was received but not paid by the end of February.
1. Analyze and journalize the February transactions.
2.Front Row Entertainment Inc. had the following list of account balances on February 1, 2013:
Cash | $14,100 |
Accounts Receivable | 400 |
Supplies | 2,500 |
Prepaid Insurance | 3,600 |
Prepaid Rent | 10,000 |
Equipment | 7,000 |
Accounts Payable | 1,500 |
Unearned Sales Revenue | 3,800 |
Notes Payable | 25,000 |
Common Stock | 16,000 |
Sales Revenue | 1,000 |
Artist Fee Expense | 800 |
Rent Expense | 800 |
Salaries Expense | 2,400 |
Advertising Expense | 4,500 |
Legal Expense | 1,200 |
3. Prepare a trial balance at February 28, 2013. If an amount box does not require an entry, leave it blank. List all accounts in the order of assets, liabilities, stockholders equity, revenues, and expenses.
4. Prepare the adjusting entries needed at February 28, 2013.
NOTE: You don't need to show your working for numbers 1,2 and 3. I only need help with number 4 which is adjusting entries. Thank you.
Feb. Collected advance ticket sales of $28,400 relating to various concerts that were being promoted Paid $800 to rent office space in February 2 1 Paid Equipment Supply Services $1,500, the balance remaining from the January 3 purchase 6 Paid $30,150 to secure venues for future concerts 9 Received $325 related to the festival held on January 25 12 Purchased $475 of supplies on credit from Equipment Supply Services 15 Collected $3,400 of ticket sales for the first Charm City concert on the day of the concert 15 Paid Charm City $9,000 for performing the Feb. 15 concert. (Remember: Front Row Entertainment records the fees paid to the artist in the Artist Fee Expense account.) 20 Collected advance ticket sales of $10,125 relating to various concerts that were being 21 21 promoted Collected $5,100 of ticket sales for the second Charm City concert on the day of the concert Paid Charm City $12,620 for performing the Feb. 21 concertStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started