Reference no: EM131689406
Case Problem -
On April 1, 2017, Lynn Garcia began her business, Lynn's Music Studio. All the daily activities for the month of April-including entering and paying bills, writing checks, recording of sales (both cash and on account), collection of receivables, and depositing receipts-have been recorded. It is the end of the first month of business; the adjusting journal entries need to be recorded, and financial statements need to be printed. You will record the adjusting journal entries for April 30 using the information provided below. The company file includes the account balances for Lynn's Music Studio based on the transactions recorded in Chapters 2 and 3.
1. Open the company file CH4 Lynn's Music Studio.QBW.
2. Make a backup copy of the company file and name it LMS4 [Your Name] Lynn's Music Studio.
3. Restore the backup copy of the company file. In both the Open Backup Copy and Save Company File as windows, use the file name LMS4 [Your Name] Lynn's Music Studio.
4. Change the company name to LMS4 [Your Name] Lynn's Music Studio.
5. Add the following accounts to the Chart of Accounts List:
- Type: Expense
- Number: 6300
- Name: Music Supplies Expense
- Type: Expense
- Number: 6325
- Name: Office Supplies Expense
Delete the following account: Advertising Expense.
6. Display and print the Trial Balance report before preparing the adjusting journal entries (April 1, 2017-April 30, 2017).
7. Use the information that follows to prepare adjusting journal entries. Record each adjusting journal entry separately, and use April 30, 2017, for the date.
a. The prepaid insurance represents a 1-year policy. Record insurance expense for 1 month. Refer to the trial balance to determine the amount in the Prepaid Insurance account. For Entry No., use AJE1.
b. Monthly depreciation on the assets: $60 for the Music Instruments, $40 for the Furniture, and $35 for the Computers. Record each depreciation expense as a separate adjusting journal entry.
c. The music supplies on hand total $430. Compare with the amount in the Music Supplies account to determine how much of the music supplies has been used, then record the music supplies expense.
d. The office supplies on hand total $300. Compare with the amount in the Office Supplies account to determine how much of the office supplies has been used, then record the office supplies expense.
e. The interest on the note payable for 1 month is $51. Record the interest expense. Add to the Chart of Accounts List, the Interest Payable account, Other Current Liability, number 2030.
8. Display and print the following reports for April 30, 2017:
a. Adjusted Trial Balance (worksheet): Change Interest Expense to $15 (April 1, 2017-April 30, 2017)
b. Journal: Only the adjusting journal entries (April 30, 2017-April 30, 2017)
c. Trial Balance: Change name in header of the report to Adjusted Trial Balance (April 1, 2017-April 30, 2017)
d. Profit & Loss Standard (April 1, 2017-April 30, 2017)
e. Balance Sheet Standard (April 30, 2017)