QUESTION 3 (43 marks) Samson Studio is a studio for clients to use for photos shots. Adjusting entries are performed on a monthly basis and closing entries are prepared annually on December 31. An unadjusted trial balance dated December 31, 2021, is shown below. Samson Studio Unadjusted Trial Balance December 31, 2021 Debit Credit Cash $155,850 Accounts receivable S244,200 Studio supplies $12,000 Prepaid insurance $1,500 Recording equipment S270,000 Accumulated depreciation: recording equipment $157,500 Income taxes payable S53,700 Uneamed studio revenue S28.800 Share capital S240,000 Retained earnings $114,000 Studio revenue earned S323,400 Salaries expense S54,000 Studio supplies expense $3,600 Insurance expense $3,000 Depreciation expense: recording equipment S49,500 Studio rent expense S63.000 Utilities expense $7,050 Income taxes expense $53,700 $917.400 $917 400 The data needed to determine adjusting entries at December 31, 2021 are as follows: 1) The records show that $13,200 in studio revenue had not yet been billed or recorded as of December 31. 2) Studio supplies on hand at December 31 amounts to $9,900. 3) On August 1, 2021, the studio purchased a six-month insurance policy for $4,500. The entire premium was initially debited to Prepaid Insurance. 4) The company purchased all of its recording equipment when it first began business, At that time, the recording equipment's estimated useful life was five years. Samson adopts the straight-line method of depreciation. 5) Records show that $10,800 of cash receipts originally recorded as Unearned Studio Revenue had been earned as of December 31. 6) Estimated income taxes expense for the entire year in 2021 totals $58,800. Taxes are due to pay on May 31, 2022. 7) Dividends in 2021 in the amount of $5,000 is declared on December 31, 2021 and will be paid on March 1, 2022. In addition to those account titles listed on the Unadjusted Trial Balance, the chart of accounts for Samson Studio also contains the following account titles: Dividends and Dividends Payable. Required: (a) For each of the numbered paragraphs (1 to 7), prepare the necessary adjusting entries as of December 31, 2021. (Explanation of Journal Entry is not required) (21 marks) (b) Determine the amounts and their normal balances (either Dr or Cr) to be reported in Samson Studio's year-end adjusted trial balance dated December 31, 2021 for each of the following accounts. Show workings. (12 marks) (i) (ii) (iii) Accounts receivable Studio supplies Studio revenue earned (c) By how much did Samson Studio's retained earings increase or decrease as a result of the adjusting entries performed in part a? Show workings. (5 marks) (d) The company purchased all of its recording equipment when it first began business, for how many months has the equipment been in business as of December 31, 2021. Explain your answer and show workings
