Question

g er sh forte Tarch 3-SA On February 28, 2018, Star Theatre Ines general ledger showed Cash $15.000; Land $85.000; Buildings 577.000: Record and post Equipment $20,000; Accounts Payable 512.000: Mortgage Payable $118.000, Common Shares $40,000, and Retained Earnings $27.000. During the month of March, the following transactions occurred: trial balance Mar. 1 Received three movies to be shown during the first three weeks of March. The film rental was (LO 3,4,5) $27,000. Or that amount, $10,000 was paid in cash and the remainder was on account. (Hint: Star Theatre uses the account Rent Expense to record film rentals). 2 Hired M. Brewer to operate concession stand. Brewer agrees to pay Star Theatre 15% of gross receipts, payable on the last day of each month for the right to operate the concession stand. (Hint: Star Theatre uses the account Concession Revenue to record concession receipts earned.) Ordered three additional movies, to be shown the last 10 days of March. The film rental cost will be $300 per night. Paid balance due on the movies rented on March 1. Paid the accounts payable owing at the end of February 15 Received $25,500 from customers for admissions for the first half of the month. (Hint: Star Theatre uses the account Fees Earned to record revenue from admissions.) 19 Paid advertising expenses, $950. 20 Received the movies ordered on March 5 and paid rental fee of $3,000 ($300 X 10 nights). 23 Paid salaries of $4,200. 26 Paid $1,250 of the balance due on the mortgage, as well as $750 of interest on the mortgage. 28 Paid $3,000 for the monthly income tax instalment. 30 Received statement from M. Brewer, showing gross concession receipts of $16,600, and the balance due to Star Theatre of $2,490 ($16,600 X 15%) for March. Brewer paid half of the balance due and will remit the remainder on April 5. 31 Received $25,800 from customers for admissions for the past two weeks. Instructions (a) Journalize the March transactions. (b) Set up T accounts, enter the beginning balances in the ledger at February 28, and post the March journal entries to the general ledger. (c) Prepare a trial balance at March 31.

Answer 1

a)

Date	Account	Debit	Credit
March
1	Rent Expense	$27,000
	Cash		$10,000
	Accounts payable		$17,000
12	Accounts payable	$17,000
	Cash		$17,000
13	Accounts payable	$12,000
	Cash		$12,000
15	Cash	$25,500
	Fees earned		$25,500
19	Advertising expense	$950
	Cash		$950
20	Rent Expense	$3,000
	Cash		$3,000
23	Salaries Expense	$4,200
	Cash		$4,200
26	Mortgage payable	$1,250
	Interest expense	$750
	Cash		$2,000
28	Income tax expense	$3,000
	Cash		$3,000
31	Cash ($2490/2)	$1,245
	Accounts receivable	$1,245
	Concession revenue		$2,490
31	Cash	$25,800
	Fees Earned		$25,800

______________________________________________________________

b)

Cash
Beg. Bal.	$15,000	1	$10,000
15	$25,500	12	$17,000
30	$1,245	13	$12,000
31	$25,800	19	$950
		20	$3,000
		23	$4,200
		26	$2,000
		28	$3,000
End. Bal.	$15,395
Accounts receivable
Beg. Bal.	-
31	$1,245
End. Bal.	$1,245
Land
Beg. Bal.	$77,000
End. Bal.	$77,000
Equipment
Beg. Bal.	$20,000
End. Bal.	$20,000
Advertising expense
Beg. Bal.	-
19	$950
End. Bal.	$950
Rent Expense
Beg. Bal.	-
1	$27,000
20	$3,000
End. Bal.	$30,000
Salaries expense
Beg. Bal.	-
23	$4,200
End. Bal.	$4,200
Interest expense
Beg. Bal.	-
26	$750
End. Bal.	$750
Income tax expense
Beg. Bal.	-
28	$3,000
End. Bal.	$3,000

Accounts payable
12	$17,000	Beg. Bal.	$12,000
13	$12,000	1	$17,000
		End. Bal.	$0
Mortgage payable
26	$1,250	Beg. Bal.	$118,000
		End. Bal.	$116,750
Fees Earned
		Beg. Bal.	-
		15	$25,500
		31	$25,800
		End. Bal.	$51,300
Concession revenue
		Beg. Bal.	-
		31	$2,490
		End. Bal.	$2,490
Common shares
		Beg. Bal.	$40,000
		End. Bal.	$40,000

_______________________________________________________

c)

Trial Balance
	Debit	Credit
Cash	$15,395
Accounts receivable	$1,245
Land	$85,000
Buidling	$77,000
Equipment	$20,000
Mortgage payable		$116,750
Common shares		$40,000
Retained earnings		$27,000
fees earned		$51,300
concession revenue		$2,490
Advertising expense	$950
Rent expense	$30,000
Salaries	$4,200
Interest expense	$750
Income tax expense	$3,000
Total	$237,540	$237,540