Question

In: Accounting

5. The following ledger accounts are used by the Heartland Race Track: Accounts Receivable Prepaid Advertising...

5. The following ledger accounts are used by the Heartland Race Track:

Accounts Receivable

Prepaid Advertising

Prepaid Rent

Unearned Sales Revenue

Sales Revenue

Advertising Expense

Rent Expense

Instructions:

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 November 30, the end of the fiscal year.

(a) On November 1, paid rent on the track facility for three months, $150,000.

(b) On November 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 $960,000.

(c) On November 1, borrowed $250,000 from First National Bank by issuing a 6% note payable due in three months.

(d) On November 5, programs for 20 racing days in November, 25 racing days in December and 15 racing days in January were printed for $3,000.

(e) The accountant for the concessions company reported that gross receipts for November were $140,000. Ten percent is due to Heartland and will be remitted by December 10.

Solutions

Expert Solution

a.

Date Account Titles Debit Credit
Nov-01 Prepaid Rent $       150,000
      Cash $       150,000
(Rent paid for three months)
Nov-30 Rent Expense $         50,000 =150000/3
      Prepaid Rent $         50,000
(Adjustment entry for rent)


b.

Date Account Titles Debit Credit
Nov-01 Cash $       960,000
       Unearned Sales Revenue $       960,000
(Ticket sold for performance over a year)
Nov-30 Unearned Sales Revenue $         80,000 =960000/12
      Sales Revenue $         80,000
(Adjustment entry for rent)

c.

Date Account Titles Debit Credit
Nov-01 Cash $       250,000
     Note Payable $       250,000
(Borrowed from Bank)
Nov-30 Interest Expense $            1,250 =250000*6%*1/12
     Interest Payable $            1,250
(Adjustment entry for rent)

d.

Date Account Titles Debit Credit
Nov-05 Prepaid Advertising $            3,000
       Cash $            3,000
(Cash paid for advertising)
Nov-30 Interest Expense $            1,000 =3000/60*20
     Interest Payable $            1,000
(Adjustment entry for rent)

e.

Date Account Titles Debit Credit
Nov-30 Accounts Receivable $         14,000 =140000*10%
      Sales Revenue $         14,000
(Adjustment entry for rent)

ekkarill92 answered 1 year ago
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