Question

Problem 3-05 The accounts listed below appeared in the December 31 trial balance of the Concord Theater. Credit Debit $201,488 Equipment Accumulated Depreciation-Equipment Notes Payable Admissions Revenue Advertising Expense Salaries and Wages Expense Interest Expense $64,620 162,000 385,600 15,160 59,280 2,520 From the account balances listed above and the information given below, prepare the annual adjusting entries necessary on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter o for the amounts. Round answers to o decimal places, e.g. 5,250.) (1) The equipment has an estimated life of 16 years and a salvage value of $22,848 at the end of that time. (Use straight-line method.) (2) The note payable is a 90-day note given to the bank on October 20 and bearing interest at 8%. (Use 360 days for denominator.) (3) In December, 2,190 coupon admission books were sold at $30 each and recorded as Admissions Revenue. They could be used for admission any time after January 1. (4) Advertising expense paid in advance and included in Advertising Expense $1,101. (5) Salaries and wages accrued but unpaid $4,457. Debit Credit No. Account Titles and Explanation (1)

Answer 1

1) Adjusting entry

No	General Journal	Debit	Credit
1	Depreciation expense (201488-22848/16)	11165
	Accumulated depreciation-equipment		11165
2	Interest expense (162000*8%*72/360)	2592
	Interest payable		2592
3	Admission revenue (2190*30)	65700
	Deferred revenue		65700
4	Prepaid advertising	1101
	Advertising expense		1101
5	Salaries and wages expense	4457
	Salaries and wages payable		4457

b) Updated balance

Interest expense (	2592
Admission revenue (385600-65700)	319900
Advertising expense (15160-1101)	14059
Salaries and wages expense (59280+4457)	63737