Exercise P3-5 (P3-5) (Adjusting Entries) The accounts listed on the next
page appeared in the December 31 trial balance of the Jane Alexander
Theater.
Debit Credit
Equipment $192,000
Accumulated Depreciation—Equipment $ 60,000
Notes Payable 90,000
Admissions Revenue 380,000
Advertising Expense 13,680
Salaries Expense 57,600
Interest Expense 1,400
Instructions
(a) From the account balances listed above and the information given
below, prepare the annual adjusting entries necessary on December 31.
(Omit explanations.)
(1) The equipment has an estimated life of 16 years and a salvage value
of $40,000 at the end of that time. (Use straight-line method.)
(2) The note payable is a 90-day note given to the bank October 20 and bearing interest at 10%. (Use 360 days for denominator.)
(3) In December 2,000 coupon admission books were sold at $25 each. They could be used for admission any time after January 1.
(4) Advertising expense paid in advance and included in Advertising Expense $1,100.
(5) Salaries accrued but unpaid $4,700.
(b) What amounts should be shown for each of the following on the income statement for the year?
(1) Interest expense. (3) Advertising expense.
(2) Admissions revenue. (4) Salaries expense.
Click here for the solution: (Adjusting Entries) The accounts listed on the next page appeared in the December 31 trial balance of the Jane Alexander Theater
