Reference no: EM132463327

The accounts listed below appeared in the December 31 trial balance of the Savard Theater.

                                                      Debit                     Credit

Equipment                             $192,000

Accumulated Depreciation-Equipment                      $ 60,000

Notes Payable                                                       90,000

Admissions Revenue                                               380,000

Advertising Expense                 13,680

Salaries and Wages Expense      57,600

Interest Expense                       1,400

Instructions

Question (a) From the account balances listed above and the information given below, prepare the annual adjusting entries necessary on December 31. (Omit explanations.)

Point (1) The equipment has an estimated life of 16 years and a salvage value of $24,000 at the end of that time. (Use straight-line method.)

Point (2) The note payable is a 90-day note given to the bank October 20 and bearing interest at 8%. (Use 360 days for denominator.)

Point (3) In December, 2,000 coupon admission books were sold at $30 each. They could be used for admission any time after January 1.

Point (4) Advertising expense paid in advance and included in Advertising Expense $1,100.

Point (5) Salaries and wages 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 and wages expense.