Financial and Managerial Accounting: Chapter 1 Continuing Problem - Pat Sharpe enjoys listening
Financial and Managerial Accounting Chapter 1 Continuing Problem Pat Sharpe enjoys listening to all types of music and owns countless CDs. Over the years, Pat has gained a local reputation for knowledge of music from classical to rap and the ability to put together sets of recordings that appeal to all ages. During the last several months, Pat served as a guest disc jockey on a local radio station. In addition, Pat has entertained at several friends’ parties as the host deejay. On June 1, 2012, Pat established a proprietorship known as PS Music. Using an extensive collection of music MP3 files, Pat will serve as a disc jockey on a fee basis for weddings, college parties, and other events. During June, Pat entered into the following transactions: June 1. Deposited $5,000 in a checking account in the name of PS Music. 2. Received $3,600 from a local radio station for serving as the guest disc jockey for June. 2. Agreed to share office space with a local real estate agency, Downtown Realty. PS Music will pay one-fourth of the rent. In addition, PS Music agreed to pay a portion of the salary of the receptionist and to pay one-fourth of the utilities. Paid $750 for the rent of the office. 4. Purchased supplies from City Office Supply Co. for $350. Agreed to pay $100 within 10 days and the remainder by July 5, 2012. 6. Paid $450 to a local radio station to advertise the services of PS Music twice daily for two weeks. 8. Paid $700 to a local electronics store for renting digital recording equipment. 12. Paid $350 (music expense) to Cool Music for the use of its current music demos to make various music sets. 13. Paid City Office Supply Co. $100 on account. 16. Received $500 from a dentist for providing two music sets for the dentist to play for her patients. 22. Served as disc jockey for a wedding party. The father of the bride agreed to pay $1,250 the 1st of July. 25. Received $400 for serving as the disc jockey for a cancer charity ball hosted by the local hospital. 29. Paid $240 (music expense) to Galaxy Music for the use of its library of music demos. 30. Received $900 for serving as PS disc jockey for a local club’s monthly dance. 30. Paid Downtown Realty $400 for PS Music’s share of the receptionist’s salary for June. 30. Paid Downtown Realty $300 for PS Music’s share of the utilities for June. 30. Determined that the cost of supplies on hand is $170. Therefore, the cost of supplies used during the month was $180. 30. Paid for miscellaneous expenses, $300. 30. Paid $1,000 royalties (music expense) to National Music Clearing for use of various artists’ music during the month. 30. Withdrew $500 of cash from PS Music for personal use. Instructions 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: Assets Liabilities Owner's Equity Cash Accts Rec Supplies Accounts Payable Pat Sharpe, Capital Pat Sharpe, Drawing Fees Music Office Rent Equipment Rent Advertising Wages Utilities Supplies Misc. 2. Prepare an income statement for PS Music for the month ended June 30, 2012. 3. Prepare a statement of owner’s equity for PS Music for the month ended June 30, 2012. 4. Prepare a balance sheet for PS Music as of June 30,2012.
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