Reference no: EM13986263
Lyrically Inclined Inc.
Dan Hope enjoys listening to all types of music and owns countless CDs and tapes he acquired over several years. During his musical journey, Dan has gained a local reputation for knowledge of music from classical to dancehall and the ability to put together sets of recordings that appeal to all ages. Dan has also served as a guest disc jockey on a local radio station and in addition has entertained at several friends' parties as the host deejay.
On January 1st, 2015, Dan established a corporation known as Lyrically Incline Inc. Using his extensive collections of CDs and tapes, Dan will serve as a disc jockey on a fee basis for weddings, parties, and other events. During January, Dan entered into the following transactions:
Jan 1. Deposited $1,500,000 in a bank account in the name of Lyrically Incline Inc. in exchange for capital stock.
Jan 2. Received $130,000 from a local radio station for serving as the guest disc jockey for the month.
Jan 2. Agreed to share office space with a local real estate agency, Regflo Realtors. Lyrically Incline Inc. paid ¼ of the total rental charges amounting to $120,000.
Jan 3. Purchased supplies (blank cassettes tapes, poster board, extension cords, etc.) from Ideal Office Supplies for $35,000 on credit.
Jan 5. Paid $17,000 to a local radio station to advertise the services of Lyrically Incline Inc. for the month.
Jan 8. Paid $32,500 to a local electronics store for rent on two CD players, two cassette players, and eight speakers.
Jan 12. Paid $10,000 (music expense) to Life Time Music Store for the use of its current demo CDs and tapes to make cassette tapes of various music sets.
Jan 13. Paid Ideal Office Supplies $15,000 on account.
Jan 16. Received $25,000 from radio disc jockey for providing two music sets for use in a popular radio program.
Jan 22. Served as a disc jockey for a wedding at a cost of $18,500. This service was provided to a close friend John Titus on account.
Jan 25. Received $12,500 from A. Friend for servicing as the disc jockey for a cancer charity ball hosted by the local hospital.
Jan 29. Paid $12,000 (music expense) to Condense Music for the use of its library of demo CDs and tapes.
Jan 30. Received ¾ of the amount due from John Titus for services rendered on January 22.
Jan 30. Paid Regflo Realtors $45,000 for Lyrically Incline's share of the utilities $25,000 and receptionists' salary $20,000 for January.
Jan 30. The cost of supplies used during the month amounted to $21,500.
Jan 31. Dan Hope withdrew $35,000 cash for his personal use.
Review the information provided above, answer the following questions and complete the tasks to illustrate the work that is required:
1. A. Prepare a schedule listing the transaction number in one column and beside it in another column show the effect of the transaction on the accounting equation.(Hint!!!!!) each transaction have two effect on the accounting equation., for example increase an asset and increase owners' equity or increase an asset and decrease another asset. Record the transactions in the general journal.
2. B. Post the transactions to the general ledger and extract a trial balance on January 31st, 2015.
3. C. Prepare the simple income statement, statement of owner's equity and balance sheet for January 2015.
4. D. Prepare a summary report to be appended to your submission that will guide Dan Hope to an understanding of the tasks that you have completed and why they were necessary.