The Canary Movie Rental Company had the attached transactions, in summary form, for the year ending December 31, 20X5. REQUIRED: (1) Using the attached forms, prepare journal entries, in proper general journal form, for all transactions indicated in the problem. Round all calculations to the nearest whole dollar. Use the letter of the transaction for the date. Omit explanations. Using the attached forms, post the journal entries into the Taccounts from (1) above to the accounts. Using the attached form, prepare an adjusted trial balance, in proper form, at December 31, 20X5. (2) (3) CANARY MOVIE RENTAL COMPANY ACCOUNTING TRANSACTIONS FOR YEAR ENDING DECEMBER 31, 20X5 (a) On January 1, 20X5, investors invested $150,000 cash in Canary Movie Rental in return for 100,000 shares of its $1 par value common stock. (b) Rented a building under a three year lease at an annual rental of $15,000. Under the terms of the rental agreement, the company paid the first year's rent in advance on January 1, 20X5. (c) Purchased operating supplies for cash, $5,000. (d) Purchased 5,000 movie DVDs for cash at a cost of $15 per DVD for its rental inventory. The company plans on renting the DVDs for $2.50 per day. Customers are required to make a cash deposit of $1.00 per DVD, which will be deducted from the rental charge when the DVDs are returned. (e) Purchased fixtures and equipment on credit at a cost of $20,000. (1) Purchased 2,000 additional movie DVDs for cash at a cost of $30,000. (g) During 20X5, 33,000 DVD rentals were made at the planned rate. (h) At December 31, 20X5, 4,000 DVDs were in the hands of customers on rentals. These rentals are included in the revenues in (g) above. However, the remaining rental payments over and above the cash deposits will not be received until the DVDs are returned. (1) Paid $17,500 on the fixtures and equipment purchased in (e) above. (1) Salaries paid during the year amounted to $8,500. (k) Operating supplies on hand at the end of the year amounted to $1,500. (1) The fixtures and equipment are expected to have a five year life with a $2,000 residual value at the end of that time. The video DVDs are expected to have a three year life with no residual value at the end of that time. The company will take a full year of depreciation this year on all of the assets using straight line depreciation. (m) Salaries earned but not paid at year end amounted to $800. (n) Made the appropriate adjusting entry for rent
