On April 1, 2008, Lynn Garcia began her business, called Lynnâ€™s Music
Studio. All of the daily activities for the month of Aprilâ€”including entering
and paying bills, writing checks, recording of sales (both cash and on account),
collection of receivables, and depositing receiptsâ€”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 beginning information for Lynnâ€™s Music
Studio along with the transactions recorded in chapters 2 and 3.
1. Open the company file CH4 Lynnâ€™s Music Studio.QBW.
2. Make a backup copy of the company file LMS4 [Your Name] Lynnâ€™s
3. Restore the backup copy of the company file. In both the Open and
Restore To windows, use the file name LMS4 [Your Name] Lynnâ€™s
4. Change the company name to LMS4 [Your Name] Lynnâ€™s Music
5. Add the following accounts to the Chart of Accounts List:
Name: Music Supplies Expense
chapter4 4/18/07 3:19 PM Page 4-27
4-28 CHAPTER 4
Name: Office Supplies Expense
Delete the following account:
6. Display and print the Trial Balance Report before preparing the adjusting
journal entries. (April 1, 2008â€“April 30, 2008)
7. Use the information below to prepare adjusting journal entries. Record
each adjusting journal entry separately, and use April 30, 2008, for the
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 the Entry No., use
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 to the amount in
the Music Supplies account to determine how much of the music
supplies has been used, and then record the music supplies expense.
d. The office supplies on hand total $300. Compare to the amount in
the Office Supplies account to determine how much of the office
supplies has been used, and then record the office supplies expense.
e. The interest on the note payable for 1 month is $15. 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, 2008:
a. Journal report for only the adjusting journal entries. (April 30,
2008â€“April 30, 2008)
b. Adjusted Trial Balance. Change the name in the header of the report.
(April 1, 2008â€“April 30, 2008)
c. Profit & Loss Standard (April 1, 2008â€“April 30, 2008)
d. Balance Sheet Standard (April 30, 2008)