uestion 6 (20 Marks)

Part A (4 Marks)

Seven Seas Studios is a photography business that films videos on business occasions. In its first year of operations, Seven Seas Studios generated revenue of $317,000 for services provided, $145,600 of which was on account and still outstanding at the year-end at 30 June 2021. Seven Seas Studios also received $20,000 cash in advance on 26 June 2021 for filming a major corporate event in August 2021.

How much service revenue would Seven Seas Studios has at the year ended 30 June 2021 under:

a) the cash basis of accounting? Show calculation. (2 Marks)

b) the accrual basis of accounting? Show calculation. (2 Marks)

Part B (16 Marks)

The unadjusted trial balance and the adjusted trial balance at 30 June 2021 for Hornsby Consultants are as follows.

Hornsby Consultants
Trial Balance
As at 30 June 2021
Account Name	Unadjusted Trial Balance	Adjusted Trial Balance
Debit $	Credit $	Debit $	Credit $
Cash at bank	8,500		8,500
Accounts receivable	11,500		20,000
Prepaid rent	2,000		-
Supplies	3,400		1,600
Equipment	42,000		42,000
Accumulated depreciation		-		3,500
Accounts payable		17,000		17,000
Wages payable		-		5,800
Revenue received in advance		4,900		4,900
Capital		45,000		45,000
Service revenue		65,400		73,900
Wages expenses	42,300		48,100
Rent expenses	22,000		24,000
Depreciation expense	-		3,500
Supplies expense	600		2,400
	132,300	132,300	150,100	150,100

Required:

Journalise the adjusting entries that were made on 30 June 2021. Narrations are required. (16 Marks)