The Blue Bullet Music, owned by E. Evergreen, sells instruments. The shop has a June 30, 2020 fiscal year end, uses a perpetual inventory system. On June 1, 2020, the companys trial balance reported the following:

Cash $21,385 Merchandise inventory 64,125 Supplies 3,750 Sales Returns and Allowances 42,800 Sales discounts 13,800 Land 180,000 Equipment 70,800

E. Evergreen, capital $58,400 E. Evergreen, drawings 52,800 Sales 474,080

Accumulated depreciationequipment Accounts payable

Interest Payable

Unearned revenue

Notes payable- Due Dec. 2022 Mortgage Payable- Due 2025

Transaction for the Month

13,275 12,650 6,070 4,680 42,000 200,000

Rent revenue

Cost of goods sold Advertising expense Salaries expense Rent expense Insurance expense Interest expense Accounts Receivable

1,200 301,010 2,270 68,200 18,150 4,140 1,925 20,000

During the last month of the fiscal year, the company had the following transactions:

1. Paid $5000 for rent for the month

2. Borrowed $5,000 cash signing a 6 month Note Payable with 5.5% interest to

be paid at the notes maturity

3. Purchased supplies on account for $345.

4. Hired a new employee to be paid $1,600 per week.

5. Collected $3,000 of the accounts receivable

6. Owner withdrew $4,800 cash.

Adjustment and additional data:

1. A count of supplies on June 30, shows $500 on hand.

2. The Equipment has an estimated 5-year useful life.

3. Of the mortgage payable, $60,000 must be paid on September 30 each year

4. An analysis of the Unearned Revenue account shows that 65% has been earned by June 30.

5. On June 30, services of $25,000 were provided but not recorded.

6. The mortgage payable has a 6% interest rate. Interest is paid on the first day of each month for the previous months interest.

7. Employees earned $800per day. On June 30, 6 employees were unpaid for 4 days.

8. A 12-month insurance policy was purchase February 1, 2020 for $1,800

9. The telephone bill for the month was for $550, and at the end of the month it was not recorded or paid.

(a) Using the T-Accounts provided below enter the opening balances for each account. Note- not all T Accounts needed may be created and blank T- Accounts are provided if accounts need to be created.

(b) Journalize the transactions for the month. Post the transactions and update the balances in the T-accounts.

(c) Prepare an unadjusted trial balance at year end.

(d) Record the adjustments required at the year end. Post the adjusting entries in the T Accounts created and update the account balances as required.

(e) Prepare an adjusted trial balance at year end.

(f) Prepare a multiple-step income statement, statement of owners equity, and classified balance sheet.

Answer the following Questions

1. When should adjusting entries be recorded?

2. Why does the accounting cycle include trial balances

3. Calculate the gross profit margin and the current ratio for your business?

1.accounts payable- 64,450. so it should be 65,450

2. Please add the following journal entry

Dr Prepaid Insurance 1,800

Cr Cash 1,800