Continuing Problem

Chapter 3-Instruction #1

The unadjusted trial balance for PS Music as of July 31, 2014 is as follows:

Based on those balances and the additional data below, prepare adjusting journal entries. Include Posting References, using the account numbers in your spreadsheet. You will need the following additional accounts:

Account # Account Name

18 Accumulated Depreciation-Office Equipment
22 Wages Payable
57 Insurance Expense
58 Depreciation Expense

The data needed to determine adjustments for the two-month period ending July 31, 2014, are as follows:

July 31: During July, PS Music provided guest disc jockeys for KXMD for a total of 115 hours. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of $3,600, which PS Music has already received payment for. Any additional hours beyond 80 will be billed to KXMD at $40 per hour.

July 31: Supplies on hand at July 31, $275.

July 31: The balance of the prepaid insurance account relates to the following July 1, 2014 transaction: "Paid a premium of $2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period."

July 31: Depreciation of the office equipment is $50.

July 31: The balance of the unearned revenue account relates to the contract between PS Music and KXMD, described in the July 3, 2014 transaction, which included the following: "On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of $3,600." In accordance with the contract, Peyton received $7,200 from KXMD as an advance payment for the first two months.

July 31: Accrued wages as of July 31, 2014, were $140.