The accompanying footnote reads: Before preparing your entries, take some time to review Exhibit 1.1 and consider the nature of the accounts

Case 1-1 Solutions

Requirement (1):

Assume the role of accountant Justin Phillips and complete the following:

Using the account titles provided for you in Exhibit 1.1 and referring back to the Narrative as needed, please prepare journal entries (using good form) as necessary for the transactions and events described in the accompanying exhibits for this case.* That is, you should prepare only those specific entries required to record the transactions described in these materials. You are not to consider adjusting entries that would be recorded after the events described in these exhibits.*The accompanying footnote reads: Before preparing your entries, take some time to review Exhibit 1.1 and consider the nature of the accounts provided (asset, liability, equity, revenue, or expense).

SOLUTIONS: (See page 24 for general discussion about this requirement.)

Page Number Exhibit 1.2 Additional T-Account Reference Account Title Debit Credit Discussion Reference

Saturday, November 15 No entry required.*

Sunday, November 30 No entry required.*

Monday, December 1 (i) Cash $35,000.00 pp. 14,15 [01] Common Stock $35,000.00 (to record issuance of stock in exchange for cash)

(ii) Cash $25,000.00 pp. 14,15 [02] Note Payable $25,000.00 (to record the start-up loan)

(iii) Music Equipment $35,000.00 pp. 24-25 pp. 14,15 [03] Music Library $5,000.00 Accounts Receivable $4,000.00 Customer Deposits $2,950.00 Rent Payable $2,200.00 Cash $38,850.00 (to record the purchase of certain assets from the Lowrys)

*Be sure to allocate points for students who appropriately make no entries.Shapland and Turner Cases in Financial Accounting 1st Edition Julia Solutions Manual Visit TestBankDeal.com to get complete for all chapters

(CONTINUED) Page Number Exhibit 1.2 Additional T-Account Reference Account Title Debit Credit Discussion Reference

Friday, December 5 (i) Prepaid Advertising $4,500.00 pp. 25-26 p. 14 [04] Cash $4,500.00 (to record the advance purchase of advertising)

(ii) Cash $600.00 p. 26 pp. 14,15 [05] Service Fees Earned $600.00

Saturday, December 6 (i) Customer Deposits $200.00 pp. 26-27 pp. 14,15 [06] Accounts Receivable $700.00 Service Fees Earned $900.00 (to record service fees earned from completed gigs)

(ii) & (iii) No entry required.*

Sunday, December 7 (i) Cash $300.00 p. 27 pp. 14,15 [07] Service Fees Earned $300.00 (to record service fees earned from completed gigs)

Monday, December 8 (i) Customer Deposits $400.00 p. 27 pp. 14,15 [08] Accounts Receivable $1,900.00 Service Fees Earned $2,300.00 (to record service fees earned from completed gigs)

(ii) Prepaid Insurance $2,730.00 pp. 27-28 p. 14 [09] Cash $2,730.00 (to record the advance purchase of insurance)

(iii) Rent Payable $2,200.00 p. 28 pp. 14,15 [10] Cash $2,200.00 (to record November rent credited at closing (Dec. 1))

*Be sure to allocate points for students who appropriately make no entries.

(CONTINUED) Page Number Exhibit 1.2 Additional T-Account Reference Account Title Debit Credit Discussion Reference

Tuesday, December 9 (i) Advertising Expense $300.00 p. 28 pp. 14,16 [11] Cash $300.00 (to record the cost of advertising incurred).

(ii) Cash $2,800.00 pp. 28-29 pp. 14,15 [12] Accounts Receivable $1,500.00 Customer Deposits $1,300.00 (to record customer payments)

Wednesday, December 10 (i) Professional Fees $1,300.00 pp. 15,16 [13] Accounts Payable $1,300.00 (to record the cost of legal fees incurred)

(ii) Other Receivable $750.00 p. 29 p. 14 [14] Cash $750.00 (to record payment of utilities expected to be reimbursed)

Thursday, December 11 (i) Music Library $600.00 p. 29 pp. 14,15 [15] Cash $600.00 (to record the purchase of music demos)

(ii) No entry required.* p. 29

Friday, December 12 (i) Cash $600.00 p. 30 pp. 14,15 [16] Customer Deposits $600.00 (to record deposit collected for July 2009 wedding)

(ii) Cash $1,400.00 p. 30 p. 14 [17] Accounts Receivable $1,400.00 (to record customer payments)

Saturday, December 13 No entry required.* p. 30 *Be sure to allocate points for students who appropriately make no entries.

Page Number Exhibit 1.2 Additional T-Account Reference Account Title Debit Credit Discussion Reference

Monday, December 15 (i) Accounts Receivable $700.00 p. 30 pp. 14,15 [18] Service Fees Earned $700.00 (to record service fees earned from completed gigs)

(ii) Repair & Maintenance $650.00 pp. 14,16 [19] Cash $650.00 (to record the cost of painting the reception area)

(iii) Supplies $800.00 pp. 14,15 [20] Accounts Payable $800.00 (to record purchase of office supplies on account)

Tuesday, December 16 Cash $400.00 p. 14 [21] Accounts Receivable $400.00 (to record customer payments)

Monday, December 22 Cash $9,000.00 pp. 30-31 pp. 14,15 [22] Customer Deposits $1,200.00 Accounts Receivable $3,800.00 Service Fees Earned $14,000.00 (to record service fees earned from completed gigs)

Tuesday, December 23 Dividend paid to owner $2,500.00 p. 31 pp. 14,15 [23] Cash $2,500.00 (to record personal expenditure for February-2009 cruise)

Friday, December 26 (i) Accounts Receivable $825.00 p. 31 p. 14 [24] Cash $825.00 (to record NSF check)

(ii) Accounts Payable $1,800.00 p. 31 pp. 14,15 [25] Cash $1,800.00 (to record payments on account)