Melody's Music (MM) is a calendar-year firm that sells and repairs a variety of musical instruments. They sell the instruments to schools. They also sell various accessories and music. MM prepares financial statements once per quarter. MM pays their employees every other Friday for their work that week and the preceding week. The company is only open 5 days a week and the employees are paid if the store is closed for a holiday. The total pay for a 2 week period is $14,625. The first payday in the fourth quarter was on October 9. This pay period covered the work done from September 28 through October 9. Paydays in the fourth quarter are: October 9, October 23, November 6, November 20, December 4, December 18, In addition to salary, MM pay their sales associates a 9% commission on all instrument sales. This includes only the sale of instruments, it does not include service revenue. They pay this on the last day of every month, for that months sales. The chart of accounts and the beginning trial balance is included in the spreadsheet for this project. The spreadsheet also includes a template for your solutions. The prepaid rent on the beginning trial balance was paid on December 20, 2019 to cover occupancy in 2020. The prepaid insurance was for coverage from October 1, 2020 through December 31, 2020. At the end of the quarter, MM counted office supplies. It had $1400 remaining of supplies. Depreciation for the current quarter was $54000. At the end of the year MM had completed all of the repairs that they had received cash for prior to October 1. These repairs did not require any parts. They had also completed 47% of the work for the transaction on November 30. During the fourth quarter of 2020 MM completed the transactions included on the following pages. Required for Part 1: 1) Prepare the journal entries for the quarter. Do not create any new accounts. The journal entries must be in chronological order. 2) Post the entries to t-accounts. 3) Prepare an unadjusted trial balance.

2-Oct Sold musical instruments to a school for $35,125 cash. The instruments had been included in inventory at a cost of $24,000.

5-Oct Received payment of $21,000 on account. 5-Oct Purchased instruments on credit for $224,785. 9-Oct Paid employees. 15-Oct Paid $15,000 of the balance in accounts payable. 15-Oct Paid quarterly dividends of $5,600. 19-Oct Provided repair services for a total of $26,000. The customer paid cash. Parts that were used came out of inventory at a cost of $8,000. When MM uses parts to repair instruments, it debits Cost of Goods Sold for the cost of the parts. 23-Oct Paid employees. 26-Oct Purchased a new computer for $4,500 for cash. 26-Oct Paid for advertising that will run for the next 2 months. The cost was $8,700 and MM paid in cash. Because the advertising will be used before the end of the quarter, you can just debit Advertising Expense (as opposed to a prepaid account). 27-Oct Received a bill for heating/cooling for $1,600 and paid it on the same day. 29-Oct Sold musical instruments to a school for $158,250 cash. The instruments had been included in inventory at a cost of $104,520. 30-Oct Paid sales commissions. 2-Nov Received payment of $53,210 on account. 2-Nov Issued a note receivable to a customer. The customer could not pay its account receivable on time, so MM traded the account receivable for a note receivable. The amount was $24,000. The note will bear 5% interest rate. The entire balance, both principal and interest, will be due on August 1 of the following year. 2-Nov Sold musical instruments for $236,961 on credit. The instruments had been included in inventory at a cost of $174,200. 6-Nov Paid employees. 9-Nov Paid $56,200 on account. 10-Nov Purchased office supplies for $2,100 cash. 12-Nov Issued stock for $74,200 cash. 13-Nov Sold musical instruments for $124,000 cash. The instruments had been included in inventory at a cost of $96,344. 16-Nov Received payment on account of $152,000. 20-Nov Paid employees. 23-Nov Purchased instruments on credit for $149,365. 24-Nov Purchased parts on credit for $20,300. 27-Nov Paid $35,000 of the balance in accounts payable. 27-Nov Received payment on account of $98,633. 30-Nov Received $32,150 from a customer to repair instruments. The repairs will not require any parts. MM will not be able to start the repairs for a few weeks. 30-Nov Paid sales commissions. 1-Dec Purchased a new piece of equipment, costing $126,955. MM purchased the equipment with the proceeds from a loan from the bank. The note bears an annual interest rate of 7%. Interest is payable every year. The first interest payment is due on November 28 of the following year. The balance of the note will be due in 5 years. 1-Dec Paid $1,200 for a magazine add that will run in the current month. 1-Dec Purchased instruments on credit for $47,200. 4-Dec Paid employees. 8-Dec Paid $52,332 on account. 11-Dec Paid $18,000 insurance for coverage in the 1st quarter of the following year.

15-Dec Sold musical instruments for $214,966 on credit. The instruments had been included in inventory at a cost of $163,300. 18-Dec Paid employees. 21-Dec Sold musical instruments for $65,324 on credit. The instruments had been included in inventory at a cost of $32,863. 22-Dec Paid rent of $48,972 for the following year. 28-Dec Received and paid the phone bill of $1,233. 28-Dec Received payment on account of $67,246. 29-Dec Paid $84,000 of the balance in accounts payable. 29-Dec Provided repair services for a total of $63,200 on credit. Parts that were used came out of inventory at a cost of $39,000. 29-Dec Declared quarterly dividends of $5,600. 29-Dec Made a payment on the note that existed at the beginning of the year. The total payment was $29,300. $14,742 of this was to reduce the note balance. The remainder was a payment of interest. 29-Dec Paid sales commissions.