Aduke Zhawaki is a talented musician who runs a busine
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Aduke Zhawaki is a talented musician who runs a business teaching music and playing in gigs with a variety of other mu
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Aduke Zhawaki is a talented musician who runs a business teaching music and playing in gigs with a variety of other musicians. Her business is operated as a proprietorship, under the name A to Z Music, which has a December 31 year end. On November 30, 2014, the company's general ledger included the following accounts (all accounts have normal balances): December transactions were as follows: Dec. 1 Paid December rent on her studio space, $475. 1 Purchased additional sound equipment for $3,500 from a friend who was going back to school to study accounting. Th e equipment was probably worth $5,000, but the friend needed the cash for tuition and was anxious to sell it. Paid $1,500 cash and promised to pay the remaining amount by December 5. 3 Borrowed $2,500 cash from her parents and signed a note payable. 4 Paid her friend the remaining amount owing on the December 1 transaction. 4 Collected $1,800 from customers in payment of their accounts. 7 Paid the $310 monthly insurance premium. 8 Paid for $150 of supplies. 10 Paid $2,130 of the accounts payable from November. 15 Gave musical performances at two recitals and earned $825. Th e customers had paid her in November. (Hint: In November Aduke had recorded the $825 received in advance as a liability, Unearned Revenue. By performing at the recitals, she has "paid" this obligation.) 20 Received $3,300 cash from students for music lessons provided in December. 21 Paid her monthly telephone bill of $135. 22 Billed customers $2,250 for providing music at several holiday parties. 24 Withdrew $3,000 for personal use. 29 Received $525 cash advance from a customer for a performance in January. 30 Travel expenses of $695 for December paid in cash. 31 Paid her parents $210. Of this amount, $10 is interest and the remainder is a principal payment on the note payable. Instructions (a) Enter the November 30 balances in ledger accounts. Use T accounts. (b) Journalize the December transactions. (c) Post the December journal entries to the T accounts. Add new accounts if needed. (d) Prepare a trial balance at December 31, 2014. TAKING IT FURTHER Comment on A to Z Music's cash balance at December 31, 2014. What concerns or suggestions do you have for Aduke to consider in January?
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