Question

- For each of the following transactions below, prepare the journal entry (if one is required) to record the initial transaction and then prepare the adjusting entry, if any, required on September 30, the end of the fiscal year. (Credit account titles are automatically indented when the 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.) (a) On September 1, paid rent on the track facility for three months. $210,000. (b) On September 1, sold season tickets for admission to the racetrack. The racing season is year-round with 25 racing days each month. Season ticket sales totaled $900.000. (c) On September 1, borrowed $350,000 from First National Bank by issuing a 9% note payable due in three months. (d) On September 5. programs for 20 racing days in September, 25 racing days in October, and 15 racing days in November were printed for $3,600. (e) The accountant for the concessions company reported that gross receipts for September were $150.000. Ten percent is due to the track and will be remitted by October 10. Debit Credit No. Account Titles and Explanation (a) Journal Entry: 210000 Prepaid Rent

Answer 1

Solution:

Journal entries:

No	Account title	Debit	Credit
a	Prepaid rent	$210,000
	Cash		$210,000
a	Rent expense ($210,000/3)	$70,000
	Prepaid rent		$70,000
b	Cash	$900,000
	Unearned revenue		$900,000
b	Unearned revenue ($900,000 *25/300)	$75,000
	Sales revenue		$75,000
c	Cash	$350,000
	Notes payable		$350,000
c	Interest expense ($350,000 *9% *1/12)	$2,625
	Interest payable		$2,625
d	Cash	$3,600
	Unearned revenue		$3,600
d	Unearned revenue ($3,600*20/60)	$1,200
	sales revenue		$1,200
e	Cash	$150,000
	sales revenue		$150,000
e	Sales revenue	$15,000
	Unearned revenue		$15,000

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