Question

Peyton Smith enjoys listening to all types of music and owns countless CDs. Over the years, Peyton has gained a local reputation for knowledge of music from classical to rap and the ability to put together sets of recordings that appeal to all ages.

During the last several months, Peyton served as a guest disc jockey on a local radio station. In addition, Peyton has entertained at several friends’ parties as the host deejay.

On June 1, 2016, Peyton established a corporation known as PS Music. Using an extensive collection of music MP3 files, Peyton will serve as a disc jockey on a fee basis for weddings, college parties, and other events. During June, Peyton entered into the following transactions:

Jun.	1	Deposited $4,000 in a checking account in the name of PS Music in exchange for common stock.
	2	Received $3,500 from a local radio station for serving as the guest disc jockey for June.
	2	Agreed to share office space with a local real estate agency, Pinnacle Realty. PS Music will pay one-fourth of the rent. In addition, PS Music agreed to pay a portion of the wages of the receptionist and to pay one-fourth of the utilities. Paid $800 for the rent of the office.
	4	Purchased supplies from City Office Supply Co. for $350. Agreed to pay $100 within 10 days and the remainder by July 5, 2016.
	6	Paid $500 to a local radio station to advertise the services of PS Music twice daily for two weeks.
	8	Paid $675 to a local electronics store for renting digital recording equipment.
	12	Paid $350 (music expense) to Cool Music for the use of its current music demos to make various music sets.
	13	Paid City Office Supply Co. $100 on account.
	16	Received $300 from a dentist for providing two music sets for the dentist to play for her patients.
	22	Served as disc jockey for a wedding party. The father of the bride agreed to pay $1,000 in July.
	25	Received $500 for serving as the disc jockey for a cancer charity ball hosted by the local hospital.
	29	Paid $240 (music expense) to Galaxy Music for the use of its library of music demos.
	30	Received $900 for serving as PS disc jockey for a local club’s monthly dance.
	30	Paid Pinnacle Realty $400 for PS Music’s share of the receptionist’s wages for June.
	30	Paid Pinnacle Realty $300 for PS Music’s share of the utilities for June.
	30	Determined that the cost of supplies on hand is $170. Therefore, the cost of supplies used during the month was $180.
	30	Paid for miscellaneous expenses, $415.
	30	Paid $1,000 royalties (music expense) to National Music Clearing for use of various artists’ music during the month.
	30	Paid dividends, $500.

	Required:
1.	Indicate the effect of each transaction and the balances after each transaction, using the grid provided.
	Part 2, a separate homework item, contains the remaining requirements. • Indicate the effect of each transaction and the balances after each transaction, using the grid provided. • In each transaction row (indicated by the date), you must indicate the math sign (+ or -) in the columns affected by the transaction. • You will not need to enter math signs in the balance rows (rows indicated by Bal.). Entries of 0 (zero) are not required and will be cleared if entered. • You can click on the date in the first column or last column for a pop-up with the transaction description to ensure that you are entering the correct information in that row. • Unlike images in the text, the items (e.g., Cash, Accounts Receivable, Supplies) have been repeated about halfway down the grid. This is to aid in screen navigation. Also to aid in screen navigation, you may find it helpful to zoom out by pressing Ctrl - or Ctrl+Mousewheel down. Accounting Equation grid: From 6/1 to 6/30 with balances Assets Cash +Accounts Recievable +Supplies Liabilities+ Accounts payable Owners equity +Common stock -Dividens +Fees Earned -Music Expense -Office rent expense -Equipment rent expense -Advertising expense -Wage expense -Utilities expense -Supplies Expense -Miscellaneous Expense

Answer 1

	Assets			Liabilities	Stockholders’ Equity
	Cash	+ Accounts Receivable	+ Supplies	=accounts payable	+ Common Stock	- Dividends	+ Fees Earned	- Music Expense	- Office Rent Expense	- Equipment Rent Expense	- Advertising Expense	- Wages Expense	- Utilities Expense	- Supplies Expense	- Miscellaneous Expense
1	4000				4000
Bal	4000	0	0	0	4000	0	0	0	0	0	0	0	0	0	0
2	3500						3500
Bal	7500	0	0	0	4000	0	3500	0	0	0	0	0	0	0	0
2	-800								-800
Bal	6700	0	0	0	4000	0	3500	0	-800	0	0	0	0	0	0
4			350	350
Bal	6700	0	350	350	4000	0	3500	0	-800	0	0	0	0	0	0
6	-500										-500
Bal	6200	0	350	350	4000	0	3500	0	-800	0	-500	0	0	0	0
8	-675									-675
Bal	5525	0	350	350	4000	0	3500	0	-800	-675	-500	0	0	0	0
12	-350							-350
Bal	5175	0	350	350	4000	0	3500	-350	-800	-675	-500	0	0	0	0
13	-100			-100
Bal	5075	0	350	250	4000	0	3500	-350	-800	-675	-500	0	0	0	0
16	300						300
Bal	5375	0	350	250	4000	0	3800	-350	-800	-675	-500	0	0	0	0
22		1000					1000
Bal	5375	1000	350	250	4000	0	4800	-350	-800	-675	-500	0	0	0	0
25	500						500
Bal	5875	1000	350	250	4000	0	5300	-350	-800	-675	-500	0	0	0	0
29	-240							-240
Bal	5635	1000	350	250	4000	0	5300	-590	-800	-675	-500	0	0	0	0
30	900						900
Bal	6535	1000	350	250	4000	0	6200	-590	-800	-675	-500	0	0	0	0
30	-400											-400
Bal	6135	1000	350	250	4000	0	6200	-590	-800	-675	-500	-400	0	0	0
30	-300												-300
Bal	5835	1000	350	250	4000	0	6200	-590	-800	-675	-500	-400	-300	0	0
30			-180											-180
Bal	5835	1000	170	250	4000	0	6200	-590	-800	-675	-500	-400	-300	-180	0
30	-415														-415
Bal	5420	1000	170	250	4000	0	6200	-590	-800	-675	-500	-400	-300	-180	-415
30	-1000							-1000
Bal	4420	1000	170	250	4000	0	6200	-1590	-800	-675	-500	-400	-300	-180	-415
30	-500					-500
Bal	3920	1000	170	250	4000	-500	6200	-1590	-800	-675	-500	-400	-300	-180	-415