Question

Ivanhoe Co. provides music lessons to many clients across the city. The following information is available to be used in recording annual adjusting entries at the company’s September 30, 2021, year-end: 1. On October 1, 2020, the company had a balance of $1,990 in its supplies account. Additional supplies were purchased during the year totalling $1,790. The supplies inventory on September 30, 2021, amounts to $800. 2. On November 1, 2020, Ivanhoe purchased a one-year insurance policy for $3,120. 3. On January 2, 2021, a client paid $1,560 for six months of lessons starting April 2, 2021. 4. On February 1, 2021, Ivanhoe purchased a grand piano (to be used in music lessons) for $25,200. The piano’s estimated useful life is 12 years. 5. On May 1, 2021, Ivanhoe borrowed $29,400 from the bank and signed a 10-month, 8% note payable. Interest and principal are to be paid at maturity. 6. On August 1, 2021, Ivanhoe signed a contract with a neighbourhood school to provide weekly piano lessons to some of its students for a fee of $1,760 per month. The contract called for lessons to start on September 1, 2021. The school has not yet been sent an invoice for the month of September. 7. On August 15, 2021, the company paid $10,080 to Pinnacle Holdings to rent additional studio space for nine months starting September 1. Ivanhoe recorded the full payment as Prepaid Rent. 8. Ivanhoe’s instructors have earned salaries of $3,370 for the last week of September 2021. This amount will be paid to the instructors on the next payday: October 6, 2021. 9. Music lessons were provided to a local church group for $1,260 on September 30, 2021. Ivanhoe has not yet invoiced the group or recorded the transaction. 10. In early October 2021, Ivanhoe received an invoice for $910 from the utility company for September utilities. The amount has not yet been recorded or paid. Prepare the adjusting journal entries.

Answer 1

No.	Date	Account Titles and Explanation	Debit	Credit
1	Sept. 30	Supplies expense	2980
		Supplies ($1990 + $1790 - $800)		2980
		(To record supplies used)
2	Sept. 30	Insurance expense ($3120 x 11/12)	2860
		Prepaid insurance		2860
		(To record expired prepaid insurance)
3	Sept. 30	Unearned revenue	1560
		Service revenue		1560
		(To record service revenue earned)
4	Sept. 30	Depreciation expense ($25200 x 8/144)	1400
		Accumulated depreciation-equipment		1400
		(To record depreciation on piano)
5	Sept. 30	Interest expense ($29400 x 8% x 5/12)	980
		Interest payable		980
		(To record interest accrued on note payable)
6	Sept. 30	Accounts receivable	1760
		Service revenue		1760
		(To record revenue accrued but yet to be billed)
7	Sept. 30	Rent expense ($10080 x 1/9)	1120
		Prepaid rent		1120
		(To record prepaid rent expired)
8	Sept. 30	Salaries expense	3370
		Salaries payable		3370
		(To record accrued but unpaid salaries)
9	Sept. 30	Accounts receivable	1260
		Service revenue		1260
		(To record revenue accrued but yet to be billed)
10	Sept. 30	Utilities expense	910
		Utilities payable/Accounts payable		910
		(To record unpaid utilities bill)