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# Tennessee Performing Arts Theatre: Prepare adjusting entries

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The account below appear in the December 31 trial balance of the Tennessee Performing Arts Theatre.

Debit Credit
Equipment \$215,000
Accumulated Depreciation - Equipment \$60,000
Notes Payable 120,000
Salaries Expense 57,600
Interest Expense 1,400

Instructions:

(a) Prepare the annual adjusting entries necessary on December 31.

1 The equipment has an estimated life of 15 years and a salvage value of \$50,000 at the end of that time. (Use straight-line method.)
Account Title Amount
Account Title Amount
Text / Memo Line

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.)
Account Title Amount
Account Title Amount
Text / Memo Line

3 In December 1,500 coupon admission books were sold at \$25 each. They could be used for admission any time after January 1.
Account Title Amount
Account Title Amount
Text / Memo Line

4 Advertising expense paid in advance and included in Advertising Expense \$1,600.
Account Title Amount
Account Title Amount
Text / Memo Line

5 Salaries accrued but unpaid of \$5,300.
Account Title Amount
Account Title Amount
Text / Memo Line

(b) What amount should be shown for each of the following accounts on the income statement for the year?

Interest Expense Amount
Salaries Expense Amount

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#### Solution Preview

Solution - (a)

1 - Dr Depreciation Expense 11,000
Cr Accumulated Depreciation 11,000
(to record depreciation for the year)...{(215000-50000)/15 = 11000}

2 - Dr Interest Expense ...

#### Solution Summary

The solution prepares adjusting entries for Tennessee Performing Arts Theatre.

\$2.19
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