Question

The accounts listed below appeared in the December 31 trial balance of the Bonita Theater.

		Debit			Credit
Equipment		$198,848
Accumulated Depreciation-Equipment					$63,510
Notes Payable					144,000
Admissions Revenue					384,800
Advertising Expense		14,650
Salaries and Wages Expense		57,050
Interest Expense		2,240

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 0 for the amounts. Round answers to 0 decimal places, e.g. 5,250.)

(1)                          The equipment has an estimated life of 16 years and a salvage value of $24,816 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, 2,140 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 $1,023.

(5)                          Salaries and wages accrued but unpaid $4,605.

Part 2

What amounts should be shown for each of the following on the income statement for the year?

(1)		Interest Expense		$
(2)		Admissions Revenue		$
(3)		Advertising Expense		$
(4)		Salaries and Wages Expense

Answer 1

41 1 Ocedit (2 $10817 Adjusting Journal Entries veliculas Debit Depreciation ALL DE $10877 TO Aluculeted Depreciation Alc (for Depreciation for current year charged) Lutereat by powse Ale Dr. $ 640 - To outstanding puterest Ale (for luterest outstanding on Bank loan. cluring the year) $640 13 $64200 Admission Revenue Ale or - To Uneamed Revenare Ale I for Uneaaned Revenue related to . Succeeding year) $ 6420 0 (4) $1023 Prefaid Adv. typ All De To Adverterent Exp Alc (for Advertisement expense related to next year transfered to Prepaid Alch 81023 5) Salaries & wayes Ale Dri $4605 To outstandiy Salary Alc $4605 (for salaries accurred belt remon unfaid during the year working Noter(a) Depreciation Cost - Salvage value No. of years - $ 198848- $ 24816 a Blo87). e) Lule rest of Bank Note 8/100 * 144000 x 90 x850. Under charged = 2880 - 2240 ) $ 640.

PART 2 Income statement Amount ( Interest Expense $2880 133 Adwulsiou by peuses/ Revenue 93,29600 (3) Advertisement expenses $13627 (4) Salarte and walls $61655 [$ 2240 + $ 640 [$ 384800 - 64200] [ $14650 - $1023]. [857050+ $4605]