Chapter 3, Problem 3.4AP

Crimson Tide Music Academy offers lessons in playing a wide range of musical instruments. The unadjusted trial balance as of December 31, 2018, appears below. December 31 is the company’s fiscal year-end.

Accounts	Debits	Credits
Cash	$ 10,300
Accounts Receivable	9,500
Supplies	2,000
Prepaid Rent	7,200
Equipment	90,000
Accumulated Depreciation		$ 12,000
Accounts Payable		7,700
Salaries Payable		-0-
Interest Payable		-0-
Utilities Payable		-0-
Notes Payable		20,000
Common Stock		45,000
Retained Earnings		19,000
Service Revenue		42,200
Salaries Expense	24,500
Interest Expense	-0-
Rent Expense	-0-
Supplies Expense	-0-
Utilities Expense	2,400
Depreciation Expense	-0-
Totals	$145,900	$145,900

 Information necessary to prepare the year-end adjusting entries appears below.

  a.    Depreciation of equipment for the year is $6,000.

  b.    Accrued salaries at year-end should be $2,100.

  c.    Crimson Tide borrows $20,000 on September 1, 2018. The principal is due to be repaid in four years. Interest is payable each August 31 at an annual rate of 12%.

  d.    Unused supplies at year-end total $700. Crimson Tide debits Supplies at the time supplies are purchased.

  e.    Crimson Tide opens a second studio by paying for one war of rent in advance on April 1, 2018, for $7,200 ($600 per month) debiting Prepaid Rent.

  f.    Unpaid utilities for December total $200.

Required:

 Record the necessary adjusting entries on December 31, 2018.