Question

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P2-5A The Lunt Theater, owned by Beth Saxena, will begin operations in March. The Lunt will be unique in that it will show only triple features of sequential theme movies. As of March 1, the ledger of Lunt showed: No. 101 Cash $3,300, No. 140 Land $26,400, No. 145 Buildings (concession stand, projection room, ticket booth, and screen) $11,000, No. 157 Equipment $11,000, No. 201 Accounts Payable $7,700, and No. 301 Owner's Capital $44,000. During the month of March, the following events and transactions occurred. Rented the three Indiana Jones movies to be shown for the first 3 Mar. 2 weeks of March. The film rental was $3,850; $1,650 was paid in cash and $2,200 will be paid on March 10. Ordered the Lord of the Rings movies to be shown the last 10 days of March. It will cost $200 per night. 9 Received $4,000 cash from admissions. Paid balance due on Indiana Jones movies rental and $2,110 on 10 March 1 accounts payable. Lunt Theater contracted with John Blume to operate the concession 1 1 || stand. Blume is to pay 15% of gross concession receipts, payable monthly, for the rental of the concession stand. |12||Paid advertising expenses $880. ||20||Received $5,500 cash from customers for admissions. Received the Lord of the Rings movies and paid the rental fee of 24 $2,200. 31 Paid salaries of $3,410. Received statement from John Blume showing gross receipts from concessions of $6,600 and the balance due to Lunt Theater of $990 |$6,600 x 15%) for March. Blume paid one-half the balance due and will remit the remainder on April 5. ||31||Received $9,900 cash from customers for admissions. (a) (Check Trial balance Totals $72,180) In addition to the accounts identified above, the chart of accounts includes: No. 112 Accounts Receivable, No. 400 Service Revenue, No. 429 Rent Revenue, No. 610 Advertising Expense, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense. Instructions (b) Enter the beginning balances in the ledger. Insert a check mark() in the reference column of the ledger for the beginning balance. (c) Journalize the March transactions. Lunt records admission revenue as service revenue, rental of the concession stands as rent revenue, and film rental expense as rent expense. (d) Post the March journal entries to the ledger. Assume that all entries are posted from page 1 of the journal. (e) Prepare an unadjusted trial balance on March 31, 2014.

Answer 1

Here's the journal entry for transactions given in the month of March 2014:

Date	Dr/Cr	Account Code	Account Title	Debit ($)	Credit ($)
2-Mar	Dr	729	Rent Expense	7,700.00
	Cr	101	Cash		5,500.00
	Cr	201	Accounts Payable		2,200.00
			(Being Rented three movies to be shown for first 3 weeks of March)
9-Mar	Dr	101	Cash	4,000.00
	Cr	400	Service Revenue		4,000.00
			(Being received cash from Admissions)
10-Mar	Dr	201	Accounts Payable	2,110.00
	cr	101	Cash		2,110.00
			(Being balance due on Rental partially paid)
12-Mar	Dr	610	Advertising Expense	880.00
	Cr	101	Cash		880.00
			(Being Advertising Expense paid)
20-Mar	Dr	101	Cash	5,500.00
	Cr	400	Service Revenue		5,500.00
			(Being received cash from Admissions)
20-Mar	Dr	729	Rent Expense	2,200.00
	Cr	101	Cash		2,200.00
			(Being rental fee paid for movie)
31-Mar	Dr	726	Salaries and Wages	3,410.00
	Cr	101	Cash		3,410.00
			(Being salaries Paid)
31-Mar	Dr	101	Cash	495.00
	Dr	112	Accounts Receivable	495.00
	Cr	429	Rent Revenue		990.00
			(Being rent revenue of concession stand accounted)
31-Mar	Dr	101	Cash	9,900.00
	Cr	400	Service Revenue		9,900.00
			(Being received cash from Admissions)

Here's the General ledger after posting above journals and with opening balance:

Posting Journals to General Ledger Acct Code/Ref Item Debit Credit Balance Date 101: Cash Account: 3,300 Dr Opening Balance c/d (c/d) Mar 1, 2014 3,300 Rent Expense Service Revenue Mar 10, 2014 Accounts Payable Mar 12, 2014 Advertising Expense (2,200) cr 5,500 Mar 2, 2014 729 400 1,800 Dr Mar 9, 2014 4,000 (310) cr (1,190) cr 201 2,110 610 880 Mar 20, 2014 Service Revenue 4,310 Dr 400 5,500 Mar 20, 2014 Rent Expense Mar 31, 2014Service Revenue Mar 31, 2014 Rent Revenue Mar 31, 2014 Salaries & Wages 2,110 Dr 729 2,200 400 12,010 Dr 12.505 Dr 9,900 429 495 726 9,095 Dr 3,410 Balance c/f Mar 31, 2014 9,095 23,195 23,195 Balance c/d Apr 01, 2014 9,095 400: Service Revenue Account: Cash Mar 9, 2014 101 4,000 cr 4,000 Mar 20, 2014 Cash 9,500 cr 101 5,500 Mar 31, 2014 Cash 19,400 cr 101 9,900 Balance c/f Mar 31, 2014 19,400 19,400 19,400 Balance c/d Apr 01, 2014 19,400 Account: 429: Rent Revenue Mar 31, 2014 Cash 495 cr 101 495 Mar 31, 2014 Accounts Receivable 990 cr 112 495 990 cr Balance c/f Mar 31, 2014 990 990 990 Balance c/d Apr 01, 2014 990 729: Rent Expense Account: Cash 5,500 dr Mar 2, 2014 101 5,500 Accounts Payable 7,700 dr Mar 2, 2014 201 2,200 Mar 20, 2014 Cash 9,900 dr 101 2,200 Balance c/f Mar 31, 2014 9,900 9,900 9,900 Balance c/d 9,900 Apr 01, 2014 610: Advertising Expense Account: Mar 12, 2014 Cash 880 dr 101 880 Balance c/f Mar 31, 2014 880 880 880 Balance c/d Apr 01, 2014 880 726: Salaries & Wages Account: Mar 31, 2014 Cash 3,410 dr 101 3,410 Balance c/f Mar 31, 2014 3,410 3,410 3,410 Balance c/d Apr 01, 2014 3,410 Account: 201:Accounts Payable Opening Balance c/d Rent Expense (c/d) 7,700 7,700 cr Mar 1, 2014 9,900 cr 729 Mar 2, 2014 2,200 Mar 10, 2014 Cash 7,790 cr 101 2,110 Balance c/f Mar 31, 2014 7,790 9,900 9,900 Balance c/d Apr 01, 2014 7,790 112:Accounts Receivable Account: Mar 31, 2014Rent Revenue 495 dr 495 Balance c/f Mar 31, 2014 495 495 495 Balance c/d Apr 01, 2014 495

Thus, arriving at unadjusted TB as on March 31, 2014:

Unadjusted Trial Balance of Lunt Theater as on Mar 31,2014 Additional Entry Debit ($) Credit ($ Mar 31, 2014 Mar 1, 2014 Account Code Account title 101 Cash 140 Land 145 Building 157 Equipment 201 Accounts Payable 301 Owner's Capital 112 Accounts Receivable 400 Service Revenue 429 Rent Reveue 610 Advertising Expense 726 Salaries&Wages 729 Rent Expense Debit ($) Credit (S) Debit ($ Credit (S) 9,095 3,300 5,795 26,400 26,400 11,000 11,000 11,000 11,000 7,700 90 7,790 44,000 44,000 495 19,400 19,400 990 990 880 880 3,410 3,410 9,900 9,900 72,180 20,480 51,700 51,700 20,480 72,180 495