Music-Is-Us, Inc., is a supplier of musical instruments for professional and amateur musicians. The companys accountants make adjusting entries monthly, and they make all closing entries annually. The company is growing rapidly and prides itself on having no long-term liabilities.

The company has provided the following trial balance dated December 31, 2015:

MUSIC-IS-US, INC. TRIAL BALANCE DECEMBER 31, 2015
Cash	$	45,000
Marketable securities		25,000
Accounts receivable		125,000
Allowance for doubtful accounts				$	5,000
Merchandise inventory		250,000
Office supplies		1,200
Prepaid insurance		6,600
Building and fixtures		1,791,000
Accumulated depreciation					800,000
Land		64,800
Accounts payable					70,000
Unearned customer deposits					8,000
Income taxes payable					75,000
Capital stock					1,000,000
Retained earnings					240,200
Unrealized holding gain on investments					6,000
Sales					1,600,000
Cost of goods sold		958,000
Bank service charges		200
Uncollectible accounts expense		9,000
Salary and wages expense		395,000
Office supplies expense		400
Insurance expense		6,400
Utilities expense		3,600
Depreciation expense		48,000
Income tax expense		75,000
	$	3,804,200		$	3,804,200

Other information pertaining to the companys trial balance is shown below:

1.

The most recent bank statement reports a balance of $46,975. Included with the bank statement was a $2,500 check from Iggy Smarts, a professional musician, charged back to Music-Is-Us as NSF. The banks monthly service charge was $25. Three checks written by Music-Is-Us to suppliers of merchandise inventory had not yet cleared the bank for payment as of the statement date. These checks included: no. 508, $5,500; no. 511, $7,500; and no. 521, $8,000. Deposits of $16,500 reached the bank too late for inclusion in the current bank statement. The company prepares a bank reconciliation at the end of each month.

2.	Music-Is-Us has a portfolio of marketable securities that originally cost $19,000. As of December 31, the market value of these securities was $27,500. All short-term investments are classified as available for sale.

3.	During December, $6,400 of accounts receivable were written off as uncollectible. A recent aging of the companys accounts receivable led management to conclude that an allowance for doubtful accounts of $8,500 is needed at December 31, 2015.

4.	The company uses a perpetual inventory system. A year-end physical count revealed that several guitars reported in the inventory records were missing. The cost of the missing units amounted to $1,350. This amount is not considered significant relative to the total cost of inventory on hand.

5.	At December 31, approximately $900 in office supplies remained on hand.

6.	The company pays for its insurance policies 12 months in advance. Its most recent payment was made on November 1, 2015. The cost of this policy was slightly higher than the cost of coverage for the previous 12 months.

7.	Depreciation expense related to the companys building and fixtures is $5,000 for the month ending December 31, 2015.

8.

Although Music-Is-Us carries an extensive inventory, it is not uncommon for experienced musicians to order custom guitars made to their exact specifications. Manufacturers do not allow any sales returns of custom-made guitars. The entire sales amount is collected at the time a custom order is placed, and is credited to an account entitled Unearned Customer Deposits. As of December 31, $4,800 of these deposits remained unfilled because the special-order guitars have not been received from the manufacturer. The cost of goods sold and the reduction in inventory associated with all custom orders is recorded when the custom merchandise is delivered to customers. At that time, the adjusting entry requires only a decrease to unearned customer deposits and an increase in sales.

9.	Accrued income taxes payable for the entire year ending December 31, 2015, total $81,000. No income tax payments are due until early in 2016.

1.

Required information

Instructions

a.	Prepare a bank reconciliation and make the journal entries to update the accounting records of Music-Is-Us as of December 31, 2015.

Music-Is-Us, Inc., is a supplier of musical instruments for professional and amateur musicians. The companys accountants make adjusting entries monthly, and they make all closing entries annually. The company is growing rapidly and prides itself on having no long-term liabilities.

The company has provided the following trial balance dated December 31, 2015:

MUSIC-IS-US, INC. TRIAL BALANCE DECEMBER 31, 2015
Cash	$	45,000
Marketable securities		25,000
Accounts receivable		125,000
Allowance for doubtful accounts				$	5,000
Merchandise inventory		250,000
Office supplies		1,200
Prepaid insurance		6,600
Building and fixtures		1,791,000
Accumulated depreciation					800,000
Land		64,800
Accounts payable					70,000
Unearned customer deposits					8,000
Income taxes payable					75,000
Capital stock					1,000,000
Retained earnings					240,200
Unrealized holding gain on investments					6,000
Sales					1,600,000
Cost of goods sold		958,000
Bank service charges		200
Uncollectible accounts expense		9,000
Salary and wages expense		395,000
Office supplies expense		400
Insurance expense		6,400
Utilities expense		3,600
Depreciation expense		48,000
Income tax expense		75,000
	$	3,804,200		$	3,804,200

Other information pertaining to the companys trial balance is shown below:

1.

The most recent bank statement reports a balance of $46,975. Included with the bank statement was a $2,500 check from Iggy Smarts, a professional musician, charged back to Music-Is-Us as NSF. The banks monthly service charge was $25. Three checks written by Music-Is-Us to suppliers of merchandise inventory had not yet cleared the bank for payment as of the statement date. These checks included: no. 508, $5,500; no. 511, $7,500; and no. 521, $8,000. Deposits of $16,500 reached the bank too late for inclusion in the current bank statement. The company prepares a bank reconciliation at the end of each month.

2.	Music-Is-Us has a portfolio of marketable securities that originally cost $19,000. As of December 31, the market value of these securities was $27,500. All short-term investments are classified as available for sale.

3.	During December, $6,400 of accounts receivable were written off as uncollectible. A recent aging of the companys accounts receivable led management to conclude that an allowance for doubtful accounts of $8,500 is needed at December 31, 2015.

4.	The company uses a perpetual inventory system. A year-end physical count revealed that several guitars reported in the inventory records were missing. The cost of the missing units amounted to $1,350. This amount is not considered significant relative to the total cost of inventory on hand.

5.	At December 31, approximately $900 in office supplies remained on hand.

6.	The company pays for its insurance policies 12 months in advance. Its most recent payment was made on November 1, 2015. The cost of this policy was slightly higher than the cost of coverage for the previous 12 months.

7.	Depreciation expense related to the companys building and fixtures is $5,000 for the month ending December 31, 2015.

8.

Although Music-Is-Us carries an extensive inventory, it is not uncommon for experienced musicians to order custom guitars made to their exact specifications. Manufacturers do not allow any sales returns of custom-made guitars. The entire sales amount is collected at the time a custom order is placed, and is credited to an account entitled Unearned Customer Deposits. As of December 31, $4,800 of these deposits remained unfilled because the special-order guitars have not been received from the manufacturer. The cost of goods sold and the reduction in inventory associated with all custom orders is recorded when the custom merchandise is delivered to customers. At that time, the adjusting entry requires only a decrease to unearned customer deposits and an increase in sales.

9.	Accrued income taxes payable for the entire year ending December 31, 2015, total $81,000. No income tax payments are due until early in 2016.

1.

Required information

Instructions

a.	Prepare a bank reconciliation and make the journal entries to update the accounting records of Music-Is-Us as of December 31, 2015.

b-i

Prepare the necessary adjusting entries at December 31, 2015

j- on the baisi of the adjusment made to the accounting records in part a through i, prepare company's adjusted trial balance at 31 december, 2015

k-1 using the adjusted trial balance prepared in part j above, prepare an anuual income statement dated december 31, 2015

k-2 using the adjusted trial balance prepared in part j above, prepare statement of retained earnings dated december 31, 2015

k-3 using the adjusted trial balance prepared in part j above prepapre a balance sheet dated 31 december , 2015

l. Using the financial statements prepared in part k above, determine approximately how many days on average an account receivable remains outstanding before it is collected. You may assume that the company's ending net accounts receivable balance on December 31 is a close approximation of its net average accounts receivable balance throughout the year.

m.

Using the financial statements prepared in part k, determine approximately how many days on average an item of merchandise remains in stock before it is sold. You may assume that the company's ending merchandise inventory balance on December 31 is a close approximation of its average merchandise inventory balance throughout the year

n.	Using the financial statements prepared in part k, determine approximately how many days it takes to convert the company's inventory into cash.