Question

The Palace Theater opened on April 1. All facilities were completed on March 31. At this time, the ledger showed No. 101 Cash $6,000, No. 140 Land $12,000, No. 145 Buildings (concession stand, projection room, ticket booth, and screen) $8,000, No. 157 Equipment $6,000, No. 201 Accounts Payable $2,000, No. 275 Mortgage Payable $10,000, and No. 311 Common Stock $20,000. During April, the following events and transactions occurred.

Apr. 2		Paid film rental of $800 on first movie.
3		Ordered two additional films at $950 each.
9		Received $1,800 cash from admissions.
10		Made $2,000 payment on mortgage and $1,000 for accounts payable due.
11		Palace Theater contracted with Dever Company to operate the concession stand. Dever is to pay 18% of gross concession receipts (payable monthly) for the rental of the concession stand.
12		Paid advertising expenses $320.
20		Received one of the films ordered on April 3 and was billed $950. The film will be shown in April.
25		Received $5,200 cash from admissions.
29		Paid salaries $1,600.
30		Received statement from Dever showing gross concession receipts of $1,000 and the balance due to The Palace Theater of $180 ($1,000 × 18%) for April. Dever paid one-half of the balance due and will remit the remainder on May 5.
30		Prepaid $1,000 rental on special film to be run in May.

In addition to the accounts identified above, the chart of accounts shows No. 112 Accounts Receivable, No. 136 Prepaid Rent, No. 400 Service Revenue, No. 429 Rent Revenue, No. 610 Advertising Expense, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.

A. Enter the beginning balances in the ledger as of April 1

b.Journalize the April transactions. Palace records admission revenue as service revenue, rental of the concession stand as rent revenue, and film rental expense as rent expense.

c.Post the April journal entries to the ledger.

d.Prepare a trial balance on April 30, 2017.

Answer 1

(a) & (c)

Cash   No. 101

Date		Explanation		Ref.		Debit		Credit		Balance
Apr.   1		Balance		✓						6,000
2				J1				800		5,200
9				J1		1,800				7,000
10				J1				3,000		4,000
12				J1				320		3,680
25				J1		5,200				8,880
29				J1				1,600		7,280
30				J1		90				7,370
30				J1				1,000		6,370

Accounts Receivable   No. 112

Date		Explanation		Ref.		Debit		Credit		Balance
Apr. 30				J1		90				90

Prepaid Rent   No. 136

Date		Explanation		Ref.		Debit		Credit		Balance
Apr. 30				J1		1,000				1,000

Land   No. 140

Date		Explanation		Ref.		Debit		Credit		Balance
Apr. 1		Balance		✓						12,000

Buildings No. 145

Date		Explanation		Ref.		Debit		Credit		Balance
Apr. 1		Balance		✓						8,000

Equipment   No. 157

Date		Explanation		Ref.		Debit		Credit		Balance
Apr.   1		Balance		✓						6,000

Accounts Payable No. 201

Date		Explanation		Ref.		Debit		Credit		Balance
Apr.   1		Balance		✓						2,000
10				J1		1,000				1,000
20				J1				950		1,950

Mortgage Payable   No. 275

Date		Explanation		Ref.		Debit		Credit		Balance
Apr.   1		Balance		✓						10,000
10				J1		2,000				8,000

Common Stock No. 311

Date		Explanation		Ref.		Debit		Credit		Balance
Apr.   1		Balance		✓						20,000

Service Revenue No. 400

Date		Explanation		Ref.		Debit		Credit		Balance
Apr.   9				J1				1,800		1,800
25				J1				5,200		7,000

Rent Revenue No. 429

Date		Explanation		Ref.		Debit		Credit		Balance
Apr.   30				J1				180		180

Advertising Expense   No. 610

Date		Explanation		Ref.		Debit		Credit		Balance
Apr. 12				J1		320				320

Salaries and Wages Expense No. 726

Date		Explanation		Ref.		Debit		Credit		Balance
Apr. 29				J1		1,600				1,600

Rent Expense   No. 729

Date		Explanation		Ref.		Debit		Credit		Balance
Apr. 2				J1		800				800
20				J1		950				1,750

(b) J1

Date		Account Titles and Explanation		Ref.		Debit		Credit
Apr. 2		Rent Expense.......................................................... Cash............................................................ (Paid film rental)		729 101		800		800
3		No entry—not a transaction.
9		Cash........................................................................ Service Revenue.......................................... (Received cash for services provided)		101 400		1,800		1,800
10		Mortgage Payable................................................... Accounts Payable................................................... Cash............................................................ (Made payments on mortgage and accounts payable)		275 201 101		2,000 1,000		3,000

Date		Account Titles and Explanation		Ref.		Debit		Credit
Apr.   11		No entry—not a transaction.
12		Advertising Expense................................................   Cash..............................................................    (Paid advertising expenses)		610 101		320		320
20		Rent Expense...........................................................   Accounts Payable.........................................    (Rented film on account)		729 201		950		950
25		Cash.........................................................................        Service Revenue...........................................    (Received cash for services    provided)		101 400		5,200		5,200
29		Salaries and Wages Expense....................................   Cash..............................................................    (Paid salaries expense)		726 101		1,600		1,600
30		Cash.........................................................................      Accounts Receivable................................................   Rent Revenue...............................................    (18% X $1,000)    (Received cash and    balance on account for    concession revenue)		101 112 429		90 90		180
30		Prepaid Rent............................................................   Cash..............................................................    (Paid cash for future film    rentals)		136 101		1,000		1,000

(d)

PALACE THEATER

Trial Balance

April 30, 2017

     

Debit Credit

Cash.............................................................................................. $ 6,370

  Accounts Receivable....................................................................   90

  Prepaid Rent.................................................................................     1,000

  Land.............................................................................................     12,000

  Buildings......................................................................................     8,000

  Equipment....................................................................................     6,000

  Accounts Payable.........................................................................     $ 1,950

  Mortgage Payable.........................................................................   8,000

  Common Stock.............................................................................   20,000

  Service Revenue...........................................................................   7,000

  Rent Revenue...............................................................................     180

  Advertising Expense....................................................................   320

  Salaries and Wages Expense........................................................     1,600

  Rent Expense................................................................................   1,750

$37,130   $37,130

  (Tot. credits = Accts. pay. + Mortg. Pay. + Com. stk. + Serv. rev. + Rent rev.)