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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
Admissions Revenue 380,000
Advertising Expense 13,680
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
Admissions Revenue Amount
Advertising Expense Amount
Salaries Expense Amount

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Solution Summary

The solution prepares adjusting entries for Tennessee Performing Arts Theatre.

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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 ...

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