Reference no: EM132733360

Crane 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 $1,820 in its supplies account. Additional supplies were purchased during the year totalling $1,790. The supplies inventory on September 30, 2021, amounts to $600.

2. On November 1, 2020, Crane purchased a one-year insurance policy for $3,600.

3. On January 2, 2021, a client paid $1,500 for six months of lessons starting April 2, 2021.

4. On February 1, 2021, Crane purchased a grand piano (to be used in music lessons) for $24,480. The piano's estimated useful life is 12 years.

5. On May 1, 2021, Crane borrowed $27,420 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, Crane signed a contract with a neighbourhood school to provide weekly piano lessons to some of its students for a fee of $1,700 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 $10,260 to Pinnacle Holdings to rent additional studio space for nine months starting September 1. Crane recorded the full payment as Prepaid Rent.

8. Crane's instructors have earned salaries of $2,970 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 $1,200 on September 30, 2021. Crane has not yet invoiced the group or recorded the transaction.

10. In early October 2021, Crane received an invoice for $860 from the utility company for September utilities. The amount has not yet been recorded or paid.

Problem 1: Prepare the adjusting journal entries.