The Accounting Records of Cary's Magic Shows Reflect the Following

question 152

Essay

The accounting records of Cary's Magic Shows reflect the following account balances at January 1, 2019: During 2019, the following transactions occurred:
1.On February 1, rented a small office for a one year period of time. Paid $12,000 cash.
2.On November 1, received $3,600 cash for magic lessons to be provided evenly over November, December, and January.
3.By December 31, used 6,000 of the supplies.
4.At December 31, accrued $5,000 in wages and salaries.
5.During the year, paid cash for $25,000 in wages and salaries.
6.During the year, earned $65,000 cash in magic lesson revenue.
Required:
A)Determine the effect on financial statement accounts of the preceding transactions.
Hint: It may be helpful to create a table to reflect the increases and decreases in account.
B)Prepare an income statement for 2019 ignoring income taxes.
C)Prepare a classified balance sheet at December 31, 2019.

• A)Determine the effect on financial statement accounts of the preceding transactions. Hint: It may be helpful to create a table to reflect the increases and decreases in account.
• B)Prepare an income statement for 2019 ignoring income taxes.
• C)Prepare a classified balance sheet at December 31, 2019.