READ BEFORE CONTINUING: This is one problem. It is a complex problem with many parts and has a predefined answer template with which it should be answered using. This answer template has been included in the images below. Please use each answer template to answer its corresponding question part. I will be using this to compare the answers which I got to the ones I will receive here from accounting experts. Thank you.

Template for parts a through i

Template for part J

Template for part s K through N

COMPREHENSIVE PROBLEM 2. Music-Is-Us, Inc. Music-Is-Us, Inc., is a supplier of musical instruments for professional and amateur musi- cians. The company's 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, 2018. MUSIC-IS-US, INC. TRIAL BALANCE DECEMBER 31, 2018 $ 45,000 25.000 125,000 $ 5,000 250.000 1.200 6.600 1,791,000 800.000 64.800 Cash Marketable securities Accounts receivable Allowance for doubtful accounts Merchandise inventory Office supplies. Prepaid insurance Building and fixtures. Accumulated depreciation. Land Accounts payable Unearned customer deposits Income taxes payable. Capital stock... Retained earnings. Unrealized holding gain on investments. Sales ... Cost of goods sold Bank service charges Uncollectible accounts expense. Salary and wages expense Office supplies expense. Insurance expense Utilities expense Depreciation expense Income tax expense 70,000 8.000 75,000 1.000.000 240,200 6.000 1,600,000 958,000 200 9.000 395,000 400 6,400 3,600 48.000 75,000 $3,804.200 $3,804,200 Other information pertaining to the company's trial balance is provided as follows. 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 bank's monthly service charge was $25. Three checks writ- ten 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, S5,500; no. 511, 387 $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 invest- ments are classified as "available for sale." 3. During December, $6,400 of accounts receivable were written off as uncollectible. A recent aging of the company's accounts receivable led management to conclude that an allowance for doubtful accounts of $8,500 is needed at December 31, 2018. 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 pay- ment was made on November 1, 2018. The cost of this policy was slightly higher than the cost of coverage for the previous 12 months. 7. Depreciation expense related to the company's building and fixtures is $5,000 for the month ending December 31, 2018. 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, 2018, total $81,000. No income tax payments are due until early in 2019. Instructions Prepare a bank reconciliation and make the journal entries to update the accounting records of Music-Is-Us as of December 31, 2018. b. Prepare the adjusting entry to update the company's marketable securities portfolio to its mark-to-market value. c. Prepare the adjusting entry at December 31, 2018, to report the company's accounts receiv- able at their net realizable value (ie.. total amount receivable, less estimated allowance for uncollectible accounts). d. Prepare the entry to account for the guitars missing from the company's inventory at the end of the year. e. Prepare the adjusting entry to account for the office supplies used during December f. Prepare the adjusting entry to account for the expiration of the company's insurance policies during December g. Prepare the adjusting entry to account for the depreciation of the company's building and fixtures during December. h. Prepare the adjusting entry to report portion of unearned customer deposits that were earned during December i. Prepare the adjusting entry to account for income tax expense that accrued during December j. On the basis of the adjustments made to the accounting records in parts a through i, prepare the company's adjusted trial balance at December 31, 2018. k. Using the adjusted trial balance prepared in partj, prepare an annual income statement, state- ment of retained earnings, and a balance sheet dated December 31, 2018. 388 1. Using the financial statements prepared in part k, determine approximately how many days on average an account receivable remains outstanding before it is collected. You may assume that the company's ending accounts receivable balance on December 31 is a close approximation of its 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. In other words, what is the length of the company's operating cycle? Comment briefly upon the company's financial condition from the perspective of a short-term creditor. 0. a Bank Reconciliation December 31 Balance per Bank Adjusted Bank Balance Balance per Books Adjusted Book Balance a b d e f 8 h i A B Adjustments From a4 Debit Credit Post-Adjusted part Debit Credit Unadjusted Given Debit Credit Cash 45,000 Marketable Securities 25,000 TA/R 125,000 Allowance for Doubtful Accounts (ADA) 5,000 Inventory 250,000 Office Supplies 1,200 Ppd Insurance 6,600 Building/Fixtures 1,791,000 Acc Dep 800,000 Land 64,800 |A/P 70,000 Unearned Customer Deposits 8,000 Income Tax Payable 75,000 Capital Stock 1,000,000 R/E 240,200 Unrealized Holding Gains 6,000 Sales 1,600,000 COGS 958,000 Bank Service Chg 200 Uncollectible (Bad Debt) Exp 9,000 Salary & Wage Exp 395,000 Office Supply Exp 400 Insurance Exp 6,400 Ulitities Exp 3,600 [Dep Exp 48,000 Inc Tax Exp 75,000 Totals 3,804,200 3,804,200 Prepare a Multi-Step Income Statement Income Statement For the Year Ended December 31 Net Income $0 Statement of Retained Earnings For the Year Ended December 31 12/31 Retained Earnings Prepare a Classified Balance Sheet Balance Sheet As of December 31 Total Assets Total Liabilities & Stockholders' Equity average collection period = days average inventory shelf life = days length of operation cycle = days Do not worry about completing part o COMPREHENSIVE PROBLEM 2. Music-Is-Us, Inc. Music-Is-Us, Inc., is a supplier of musical instruments for professional and amateur musi- cians. The company's 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, 2018. MUSIC-IS-US, INC. TRIAL BALANCE DECEMBER 31, 2018 $ 45,000 25.000 125,000 $ 5,000 250.000 1.200 6.600 1,791,000 800.000 64.800 Cash Marketable securities Accounts receivable Allowance for doubtful accounts Merchandise inventory Office supplies. Prepaid insurance Building and fixtures. Accumulated depreciation. Land Accounts payable Unearned customer deposits Income taxes payable. Capital stock... Retained earnings. Unrealized holding gain on investments. Sales ... Cost of goods sold Bank service charges Uncollectible accounts expense. Salary and wages expense Office supplies expense. Insurance expense Utilities expense Depreciation expense Income tax expense 70,000 8.000 75,000 1.000.000 240,200 6.000 1,600,000 958,000 200 9.000 395,000 400 6,400 3,600 48.000 75,000 $3,804.200 $3,804,200 Other information pertaining to the company's trial balance is provided as follows. 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 bank's monthly service charge was $25. Three checks writ- ten 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, S5,500; no. 511, 387 $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 invest- ments are classified as "available for sale." 3. During December, $6,400 of accounts receivable were written off as uncollectible. A recent aging of the company's accounts receivable led management to conclude that an allowance for doubtful accounts of $8,500 is needed at December 31, 2018. 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 pay- ment was made on November 1, 2018. The cost of this policy was slightly higher than the cost of coverage for the previous 12 months. 7. Depreciation expense related to the company's building and fixtures is $5,000 for the month ending December 31, 2018. 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, 2018, total $81,000. No income tax payments are due until early in 2019. Instructions Prepare a bank reconciliation and make the journal entries to update the accounting records of Music-Is-Us as of December 31, 2018. b. Prepare the adjusting entry to update the company's marketable securities portfolio to its mark-to-market value. c. Prepare the adjusting entry at December 31, 2018, to report the company's accounts receiv- able at their net realizable value (ie.. total amount receivable, less estimated allowance for uncollectible accounts). d. Prepare the entry to account for the guitars missing from the company's inventory at the end of the year. e. Prepare the adjusting entry to account for the office supplies used during December f. Prepare the adjusting entry to account for the expiration of the company's insurance policies during December g. Prepare the adjusting entry to account for the depreciation of the company's building and fixtures during December. h. Prepare the adjusting entry to report portion of unearned customer deposits that were earned during December i. Prepare the adjusting entry to account for income tax expense that accrued during December j. On the basis of the adjustments made to the accounting records in parts a through i, prepare the company's adjusted trial balance at December 31, 2018. k. Using the adjusted trial balance prepared in partj, prepare an annual income statement, state- ment of retained earnings, and a balance sheet dated December 31, 2018. 388 1. Using the financial statements prepared in part k, determine approximately how many days on average an account receivable remains outstanding before it is collected. You may assume that the company's ending accounts receivable balance on December 31 is a close approximation of its 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. In other words, what is the length of the company's operating cycle? Comment briefly upon the company's financial condition from the perspective of a short-term creditor. 0. a Bank Reconciliation December 31 Balance per Bank Adjusted Bank Balance Balance per Books Adjusted Book Balance a b d e f 8 h i A B Adjustments From a4 Debit Credit Post-Adjusted part Debit Credit Unadjusted Given Debit Credit Cash 45,000 Marketable Securities 25,000 TA/R 125,000 Allowance for Doubtful Accounts (ADA) 5,000 Inventory 250,000 Office Supplies 1,200 Ppd Insurance 6,600 Building/Fixtures 1,791,000 Acc Dep 800,000 Land 64,800 |A/P 70,000 Unearned Customer Deposits 8,000 Income Tax Payable 75,000 Capital Stock 1,000,000 R/E 240,200 Unrealized Holding Gains 6,000 Sales 1,600,000 COGS 958,000 Bank Service Chg 200 Uncollectible (Bad Debt) Exp 9,000 Salary & Wage Exp 395,000 Office Supply Exp 400 Insurance Exp 6,400 Ulitities Exp 3,600 [Dep Exp 48,000 Inc Tax Exp 75,000 Totals 3,804,200 3,804,200 Prepare a Multi-Step Income Statement Income Statement For the Year Ended December 31 Net Income $0 Statement of Retained Earnings For the Year Ended December 31 12/31 Retained Earnings Prepare a Classified Balance Sheet Balance Sheet As of December 31 Total Assets Total Liabilities & Stockholders' Equity average collection period = days average inventory shelf life = days length of operation cycle = days Do not worry about completing part o