"On January 1, Kevin Reynolds, a student at State U, decides to start a business. Kevin has noticed that various student organizations around campus are having more and more need for mass produced copies of programs on CDs. While a lot of students have a CD drive on their computers that can write to CDs, it is a slow process when a high volume of CDs is needed. Kevin believes that with a beginning investment in specialty equipment, he can provide a valuable product to the college community. So on 1/1, Kevin officially begins Kevins Kool CD Kopies. Of course, Kevin is very careful to ensure that his customers have full ownership rights to the material on their CDs. " Part 1: The following occur during January. 1. Kevin deposits $500 of his own money into the companys checking account. 2. Kevin signs a note payable in the amount of $1,000 from Neighborhood Bank. The note is due in one year. 3. KKCDK (Kevins Kool CD Kopies) purchases a CD duplicator (a piece of equipment), which can copy seven CDs at one time. The cost is $1,300 and he pays cash. 4. KKCDK purchases 500 blank CDs for $150 on account. 5. KKCDK pays $20 cash for flyers to advertise. 6. KKCDK quickly catches on with the student groups on campus. KKCDK sells 400 CDs to various groups for $0.80 per CD. KKCDK receives cash payment for 300 of the CDs and the student groups owe for the other 100 CDs. 7. KKCDK pays $100 on its accounts payable. 8. KKCDK receives $40 in advance to copy 50 CDs for a student group. He will not begin work on the project until February. 9. KKCDK incurs $40 in tax expense. The taxes will be paid in February. Required: A. Prepare journal entries for the above events if needed. B. Post the journal entries to T-accounts. C. Prepare an unadjusted trial balance for KKCDK for January. D. Prepare adjusting entries for the following and post them to your T-accounts. 10. Kevins roommate, Mark, helps with the CD copying and delivering. KKCDK pays Mark a salary of $50 per month. Mark will get his first check on February 1. 11. KKCDK incurs $10 in interest expense. The interest will be paid with the note. Required: E. Prepare an adjusted trial balance for KKCDK for January. F. Prepare financial statements for KKCDK for January. Part II: The following occur in February: 12. Kevin decides to expand outside the college. On the first day of the month, KKCDK pays $20 in advance for advertising in the local paper. The advertisements will run during February and March. 13. The student groups paid for the 100 CDs not paid for in January. 14. KKCDK paid off its remaining accounts payable, salaries payable, taxes payable and interest payable. 15. KKCDK purchases 450 CDs for $135 on account. 16. KKCDK sells 500 CDs during the month for $0.80 each. KKCDK receives cash for 450 of them and is owed for the other 50. 17. KKCDK completes and delivers the advanced order of 50 CDs described in number 8 above. 18. KKCDK incurs $80 in tax expense. The taxes will be paid in March. Required: G. Prepare journal entries for the above events if needed. H. Post the journal entries to the T-accounts. I. Prepare an unadjusted trial balance for KKCDK for February. J. Prepare adjusting entries for the following and post them to your T-accounts. 19. Mark continues to earn his salary of $50 and will be paid on March 1. 20. An adjustment is made for advertising in number 12 above. 21. KKCDK incurs $10 in interest expense. The interest will be paid with the note. K. Prepare an adjusted trial balance for KKCDK for February. L. Prepare the financial statements for February. Answer E-K