Western Sound Studios records and masters audio tapes of popular artists in live concerts. The performers use the tapes to prepare ''live'' albums, CDs, and MP3s. The following account balances were available at the beginning of 2019:
Accounts Payable................................................ $ 11,900
Accounts Receivable............................................. 384,000
Cash ..................................................................16,300
Common Stock ....................................................165,000
Insurance Payable ....................................................1,000
Interest Payable......................................................11,200
Notes Payable (Long-term) ......................................100,000
Rent Payable (Building) ............................................10,000
Retained Earnings, 12/31/2018 .................................101,200
During 2019, the following transactions occurred (the events described below are aggregations of many individual events):
a. Taping services in the amount of $994,000 were billed.
b. The accounts receivable at the beginning of the year were collected.
c. In addition, cash for $983,000 of the services billed in Transaction a was collected.
d. The rent payable for the building was paid. In addition, $48,000 of building rental costs was paid in cash. There was no rent payable or prepaid rent at year-end.
e. The insurance payable on January 1 was paid. In addition, $4,000 of insurance costs was paid in cash. There was no insurance payable or prepaid insurance at year-end.
f. Utilities expense of $56,000 was incurred and paid in 2019.
g. Salaries expense for the year was $702,000. All $702,000 was paid in 2019.
h. The interest payable at January 1 was paid. During the year, an additional $11,000 of interest was paid. At year-end no interest was payable.
i. Income taxes for 2019 in the amount of $19,700 were incurred and paid.
Required:
1. Establish a T-account for the accounts listed above and enter the beginning balances. Use a chart of accounts to order the T-accounts.
2. Analyze each transaction. Journalize as appropriate.
3. Post your journal entries to the T-accounts. Add additional T-accounts when needed.
4. Use the ending balances in the T-accounts to prepare a trial balance.