Steve Martin Entertainment, Inc., is a small recording studio in Billings, MT. Bands use the studio to mix high-quality demo recordings distributed to talent agents. New clients are required to pay in advance for studio services. Bands with established credit are billed for studio services at the end of each month. Adjusting entries are performed on a monthly basis. An unadjusted trial balance dated December 31, 2018, is located below. (adjusting entries have already been made for the first eleven months of 2018, but not for December.)

Steve Martin Entertainment, Inc. Unadjusted Trial Balance December 31, 2018

1. Records show that $5,400 in studio revenue had not yet been billed or recorded as of December 31.

2. Studio supplies on hand at December 31 amount to $5,000.

3. On August 1, 2018, the studio purchased a six-month insurance policy for $1,500. The entire premium was initially debited to Unexpired Insurance.

4. The studio is located in a rented building. On November 1, 2018, the studio paid $6,000 rent in advance for November, December, and January. The entire amount was debited to Prepaid Studio Rent.

5. The useful life of the studio's recording equipment is estimated to be 10 years. The straight-line method of depreciation is used.

6. On May 1, 2018, the studio borrowed $16,000 by signing a 12-month, 9 percent note payable to First Federal Bank of Billings. The entire $16,000 plus 12 months' interest is due in full on April 30, 2019.

7. Records show that $3,000 of cash receipts originally recorded as Unearned Studio Revenue had been earned as of December 31.

8. Salaries earned by recording technicians that remain unpaid at December 31 amount to $800.

9. The studio's accountant estimates that income taxes expense for the entire year ended December 31, 2018, is $21,100.

Instructions: Prepare an Excel Spreadsheet to complete the following questions. Print and submit the complete project in class on September 4, 2019 at 8:00 am. The project should look as professional as possible when it is printed. (statements and other documents should be printed to fit properly on each page and font should be 10 or 12)

1. For each of the above numbered items, prepare the necessary adjusting journal entries for December.

2. Update the balances in the appropriate accounts affected by the adjusting journal entries and prepare an Adjusted Trial Balance. (posting to actual general ledger accounts is not required)

3. Prepare an income statement and statement of retained earnings for the year ended December 31, 2018 and a balance sheet as of December 31, 2018.

4. Prepare closing entries.

5. Prepare a post-closing trial balance as of December 31, 2018.

Reminders:

Use commas as thousand separators (1,000,000) Do not include cents in any numbers Use $ signs sparingly Use spellcheck and carefully proofread your solution Print a professional looking solution on multiple pages (keep font 10-12) Print without grid lines

Properly use underlines and double underlines A formula page is not required for this project

Steve Martin Entertainment, Inc. Unadjusted Trial Balance December 31, 2018 $ Cash 43,170 Accounts Receivable 81,400 Studio Supplies 7,600 Unexpired Insurance 500 Prepaid studio rent 4,000 Recording Equipment Accumulated Depreciation 90,000 52,500 Notes Payable Interest Payable 16,000 840 Income Tax Payable 3,200 9,600 Unearned Studio Revenue Capital Stock 80,000 Retained Earnings 38,000 Studio Revenue Earned 107,000 Salaries Expense 18,000 Supplies Expense 1,200 Insurance Expense 2,680 Depreciation Expense 16,500 Studio Rent Expense 21,000 Interest Expense 840 Utilities Expense 2,350 Income Taxes Expense 17,900 $307,140 $ 307,140