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

question 191

Essay

The accounting records of Cary's Magic Shows reflect the following account balances at January 1:
$\begin{array}{lllr}\text { Cash } & \$ 200,000 & \text { Supplies } & \$ 14,000 \\\text { Common Shares } & \$ 100,000 & \text { Retained Earnings } & \$ 114,000\end{array}$
During the current year,the following transactions occurred:
1. On February 1, the company rented a small office for a one-year period of time. Paid $\$ 12,000$ cash.
2. On November 1 , the company received $\$ 3,600$ cash for magic lessons to be provided evenly over November, December, and January.
3. By December 31 , the company had used $\$ 6,000$ of the supplies.
4. At December 31 , the company accrued $\$ 5,000$ in wages and salaries.
5. During the year, the company paid cash for $\$ 25,000$ in wages and salaries.
6. During the year, the company 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 the current year ignoring income taxes.
C) Prepare a classified balance sheet at December 31 .

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Definitions:

Biologically Based

Originating in or determined by biological factors rather than learned or chosen consciously.

Separation Protest

A behavioral response in children characterized by anxiety and distress when separated from a primary caregiver.

Empathy

The ability to understand and share the feelings of another, fostering a sense of compassion and connection.

Mutual Regulation

A concept in developmental psychology referring to the process by which an infant and a caregiver manage and synchronize their emotions, behaviors, and expectations to communicate effectively.