Prepare an income statement for the month ended january

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Reference no: EM131972153

Problem

RunHeavy Corporation (RHC) is a corporation that manages a local rock band. RHC was formed with an investment of $10,500 cash, paid in by the leader of the band on January 3 in exchange for common stock. On January 4, RHC purchased music equipment by paying $2,100 cash and signing an $8,400 promissory note payable in three years. On January 5, RHC booked the band for six concert events, at a price of $2,600 each. Of the six events, four were completed between January 10 and 20. On January 22, cash was collected for three of the four events. The other two bookings were for February concerts, but on January 24, RHC collected half of the $2,600 fee for one of them. On January 27, RHC paid $3,240 cash for the band's travel-related costs. On January 28, RHC paid its band members a total of $2,430 cash for salaries and wages for the first three events. As of January 31, the band members hadn't yet been paid wages for the fourth event completed in January, but they would be paid in February at the same rate as for the first three events. As of January 31, RHC has not yet recorded the $157 of monthly depreciation on the equipment. Also, RHC has not yet paid or recorded the $63 interest owed on the promissory note at January 31. RHC is subject to a 20% tax rate on the company's income before tax.

1. Prepare journal entries to record the transactions and adjustments needed on each of the dates indicated above. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

2. Post the journal entries from requirement 1 to T-accounts, calculate ending balances, and prepare an adjusted trial balance

3. Prepare an income statement for the month ended January 31

4. Prepare a classified balance sheet for the month ended January 31.

Reference no: EM131972153

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