Given Data:

Allison Collins, Inc. is a small photography studio in Hartford. Photographers use the
studio to make high quality photos. New clients are required to pay in advance for studio
services. Photographers with established credit are billed for studio services at the end of
each month. Adjusting entries are performed on a monthly basis. An unadjusted trial
balance dated October 31, 2012, follows. (Bear in mind that adjusting entries already
have been made for the first nine months of 2012, but not for October.)

ALLISON COLLINS, INC.

Unadjusted Trial Balance
October 31, 2012
Cash
Accounts receivable
Studio supplies
Unexpired insurance
Prepaid studio rent
Filming equipment
Accumulated depreciation: filming equipment
Notes payable
Interest payable
Accounts payable
Unearned studio revenue
Capital stock
Retained earnings
Studio revenue earned
Salaries expense
Supplies expense
Insurance expense
Depreciation expense: filming equipment
Studio rent expense
Interest expense
Utilities expense
Advertising expense
Total

Other Data
a-Records show that $7,200 in studio revenue had not yet been billed or recorded as of October 31.
b-Studio supplies on hand at October 31 amount to $3,000.
c-On June 1, 2012, the studio purchased a one-year insurance policy for $1,200. The entire premium
was initially debited to Unexpired Insurance.
d-The studio is located in a rented building. On September 1, 2012, the studio paid $6,000 rent in advance
for six months. The entire amount was debited to Prepaid Studio Rent.
e-The useful life of the studio’s recording equipment is estimated to be five years (or 60 months).
The straight-line method of depreciation is used.
f-On September 1, 2012, the studio borrowed $20,000 by signing a 12-month, 12% note payable to First
Federal Bank of Hartford. The entire $20,000 plus 12 months’ interest is due in full on August 31, 2012.
g-Records show that $4,200 of cash receipts originally recorded as Unearned Studio Revenue had
been earned as of October 31.
h-Salaries earned by recording technicians that remain unpaid at October 31 amount to $600.

Instructions
a-For each of the numbered paragraphs, prepare the necessary adjusting entry.
b-Prepare the adjusted trial balance of Allison Collins, Inc.at October 31.
c-Prepare the firm’s financial statements.
 $26,900
62,000
3,400
800
5,000
120,000
$40,000
20,000
200
2,000
10,400
60,000
45,200
115,000
16,000
800
1,100
22,000
20,000
200
2,600
12,000 ________
$292,800 $292,800
 Date Account Titles
a

ALLISON COLLINS, INC.

Adjusted Trial Balance
October 31, 2012

Total
 ALLISON COLLINS, INC.
Income Statement
month ended October 31, 2012
Revenues:
Studio revenue earned
Expenses:
Salaries expense
Supplies expense
Insurance expense
Depreciation expense: filming equipment
Studio rent expense
Interest expense
Utilities expense
Advertising expense
Net Income

ALLISON COLLINS, INC.

Statement of Retained Earnings
month ended October 31, 2012
RE, Oct 1
Add: Net Income
subtotal
less dividends
RE, Oct 31

ALLISON COLLINS, INC.

Balance Sheet
October 31, 2012
assets
Cash
Accounts receivable
Studio supplies
Unexpired insurance
Prepaid studio rent
Filming equip
Acc depr: filming equip

total -
Debit Credit

$0 $0
 -

-
-

liabilities

owner's equity

total -
 Date Account Titles Debit Credit
a Accounts receivable 7,200
Studio revenue earned 7,200
b supplies expense 400
3400-3000 studio supplies 400
c insurance expense 100
unexpired insurance 100
d studio rent expense 1,000
Prepaid studio rent 1,000
e Dep. expense: equip 2,000
120000/60 acc.dep:equip 2,000
f Interest expense 200
20000*0.12*1/12 interest payable 200
g unearned studio revenue 4,200
Studio revenue earned 4,200
h Salary expense 600
Salary payable 600

ALLISON COLLINS, INC.

Adjusted Trial Balance
October 31, 2012
Cash $26,900
Accounts receivable 69,200
Studio supplies 3,000
Unexpired insurance 700
Prepaid studio rent 4,000
Filming equipment 120,000
Accumulated depreciation: filming equipment $42,000
Notes payable 20,000
Interest payable 400
Accounts payable 2,000
Salary payable 600
Unearned studio revenue 6,200
Capital stock 60,000
Retained earnings 45,200
Studio revenue earned 126,400
Salaries expense 16,600
Supplies expense 1200
Insurance expense 1,200
Depreciation expense: filming equipment 24,000
Studio rent expense 21,000
Interest expense 400
Utilities expense 2,600
Advertising expense 12,000 ________
Total $302,800 $302,800
 ALLISON COLLINS, INC.
Income Statement
month ended October 31, 2012
Revenues:
Studio revenue earned 126,400
Expenses:
Salaries expense 16,600
Supplies expense 1200
Insurance expense 1,200
Depreciation expense 24,000
Studio rent expense 21,000
Interest expense 400
Utilities expense 2,600
Advertising expense 12,000 79,000
Net Income 47,400

ALLISON COLLINS, INC.

Statement of Retained Earnings
month ended October 31, 2012
RE, Oct 1 45,200
Add: Net Income 47,400
subtotal 92,600
less dividends -
RE, Oct 31 92,600

ALLISON COLLINS, INC.

Balance Sheet
October 31, 2012
assets liabilities
Cash $26,900 Notes payable 20,000
Accounts receivable 69,200 Interest payable 400
Studio supplies 3,000 Accounts payable 2,000
Unexpired insurance 700 Salary payable 600
Prepaid studio rent 4,000 Unearned studio revenue 6,200
Filming equip 120,000 owner's equity
Acc depr: filming e (42,000) 78,000 capital stock 60,000
ret earnings 92,600

total 181,800 total 181,800