Ken Hensley Enterprises, Inc., is a small recording studio in St. Louis. Rock bands use the studio to mix high-quality demo recordings distributed to talent agents. New clients are required to pay in advance for studio services. Bands with established credit are billed for studio services at the end of each month. Adjusting entries are performed on a monthly basis. An unadjusted trial balance dated December 31, year 1, follows. (Bear in mind that adjusting entries already have been made for the rst 11 months of year 1, but not for December.) KEN HENSLEY ENTERPRISES, INC. Unadjusted Trial Balance December 31, Year 1 Cash $ 51,804 Accounts receivable 97,680 Studio supplies 9,120 Unexpired insurance 600 Prepaid studio rent 4,800 Recording equipment 108,000 Accumulated depreciation: recording equipment 3 63,000 Notes payable 19,200 Interest payable 1,008 Income taxes payable 3,840 Unearned studio revenue 11,520 Capital stock 96,000 Retained earnings 45,600 Studio revenue earned 128,400 Salaries expense 21,600 Supplies expense 1,440 Insurance expense 3,216 Depreciation expense: recording equipment 19,800 Studio rent expense 25,200 Interest expense 1,008 Utilities expense 2,820 Income taxes expense 21,480 $ 368,568 $ 368,568 Other Data 1. 2. 3. On August 1, year 1, the studio purchased a six-month insurance policy for $1,800. The entire Records show that $5,280 in studio revenue had not yet been billed or recorded as of December 31. Studio supplies on hand at December 31 amount to $8,280. premium was initially debited to Unexpired Insurance. The studio is located in a rented building. On November 1, year 1, the studio paid $7,200 rent in advance for November, December, and January. The entire amount was debited to Prepaid Studio Rent. The useful life of the studio's recording equipment is estimated to be five years (or 60 months). The straight-line method of depreciation is used. . On May 1, year 1, the studio borrowed $19,200 by signing a 12-month, 9 percent note payable to First Federal Bank of St. Louis. The entire $19,200 plus 12 months' interest is due in full on April 30, year 2. Records show that $4,320 of cash receipts originally recorded as Unearned Studio Revenue had been earned as of December 31. Salaries earned by recording technicians that remain unpaid at December 31 amount to $648. The studio's accountant estimates that income taxes expense for the entire year ended December 31, year 1, is $23,520. (Note that $21,480 of this amount has already been recorded.) a. For each ofthe above numbered paragraphs, prepare the necessary adjusting entry. b. Using figures from the company's unadjusted trial balance in conjunction with the adjusting entries made in part a, compute net income for the year ended December 31, year 1. c. Was the studio's monthly rent for the last 2 months of year 1 more or less than during the first 10 months of the year? d. Was the studio's monthly insurance expense for the last five months of year1 more or less than the average monthly expense for the first seven months of the year? e. If the studio purchased all of its equipment when it first began operations, for how many months has it been in business? 1'. Indicate the effect of each adjusting entry prepared in part a on the major elements of the company's income statement and balance sheet. Organize your answer in tabular form using the column headings shown. Use the symbols I for increase, D for decrease, and NE for no effect. The answer for the adjusting entry numberl is provided as an example. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F For each of the above numbered paragraphs, prepare the necessary adjusting entry. (If no entry is reQI select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the accrued studio revenue earned in December. Note: Enter debits before credits. Data General Journal Debit Credit Dec. 31 Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Using gures from the company's unadjusted trial balance in conjunction with the adjusting entries ma: net income for the year ended December 31, year 1. Total expenses ' Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Was the studio's monthly rent for the last 2 months of year 1 more or less than during the first 10 mon The studio's monthly rent for the last 2 months of year 1 than during the first 10 months of the year. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Was the studio's monthly insurance expense for the last five months of year 1 more or less than the av the year? Was the studio's monthly insurance expense for the last five months of year 1 than the average month column headings shown. Use the symbols I for increase, D for decrease, and NE for no effect The answer for the adjusting entry number1 is provided as an example. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F If the studio purchased all of its equipment when it first began operations, for how many months has it Age of equipment I I months Required A Required B Required C Required D Required E Required F Indicate the effect of each adjusting entry prepared in part a on the major elements of the company's income statement and balar tabular form using the column headings shown. Use the symbols I for increase, D for decrease, and ME for no effect. The answer1 provided as an example