Do part B please. Thank you in advance
Total Marks: 100 marks Question 1 (70 marks) Soprano Limited provides musical performance for customers in different events. The Company also holds music concerts regularly. Tickets must be purchased and paid in advance. Adjusting entries are performed on a monthly basis. Closing entries are performed annually on December 31. Below is the Company's unadjusted trial balance at the year ended 31 December 2020. Credits Debit $ 251,000 210,300 24,000 3,700 189,000 Soprano Limited Unadjusted Trial Balance 31 December 2020 Account Title Cash Performance fee receivable Prepaid rent Supplies Musical Instruments Accumulated depreciation: Musical Instruments Accounts payable 6% Notes payable Interest payable Unearned ticket revenue Income taxes payable Share capital ($4 per share) Retained earnings Performance revenue earned Ticket revenue earned Salaries expense Insurance expense Concert promotion expense Rent expense Depreciation expense : Musical Instruments Supplies expense Interest expense Travelling expense Income taxes expense 63,000 37,500 50,000 1,500 70,000 11,500 225,000 102,050 568,000 149,000 314,500 31,500 122,000 77,000 24,750 1,800 1,500 4,800 21,700 $1,277,550 $1,277,550 Information on adjusting entries: (1) The Company borrowed $50,000 by signing a 10-month notes payable with annual interest rate of 6% on 1 June 2020. The principal and the total accrued interest will be due on 31 March 2021. (2) On 1 October 2020, the Company has paid in advance for renting a practice room in Hong Kong Cultural Centre for four months from 1 October 2020 to 31 January 2021. No adjusting entries has been made for November and December 2020. (3) On 1 November 2020, 150 tickets of $200 each were sold for cash for the string orchestra concerts held on 31 December 2020. The entire amount was initially recorded as unearned ticket revenue. The concert was held successfully. (4) The Company began providing music performance for Relax hotel at the lobby every day starting from 15 December 2020 to 14 December 2021, both days inclusive, for an agreed daily fee of $3,000. The payment is settled on 14th of every month and the first payment is to be received on 14 January 2021. (5) On 31 December 2020, the Company has invited a pianist to perform in a piano concert to be held on 14 February 2021. A salary of $12,000 will be paid to the pianist after the performance. (6) During December 2020, the Company purchased additional supplies costing $5,000 in cash and no entry has been made. There are $2,500 unused supplies remain on hand on 31 December 2020. (7) Musical instruments were depreciated by straight-line method over an estimated useful life of 7 years with no residual value. (8) There was an unrecorded and unpaid salary of $15,000 earned by a musician for December 2020. (9) The accountant estimates that the total income taxes expense for the entire year should be $30,700. The amount will be due in mid of April 2021. (10) On 31 December 2020, the Company declared a dividend of $2 per share and half of the amount was paid on the same day. The remaining balance will be paid on 31 March 2021. No entries were recorded. (b) Prepare the income statement for the year ended 31 December 2020, showing breakdown of items under the captions of Revenues, Expenses, Profit before Taxes, Profit after Taxes. (14 marks)
