Sequel Theatre, owned by Nadia Fedkovych, is unique as it shows only movies that are part of

Question:

Sequel Theatre, owned by Nadia Fedkovych, is unique as it shows only movies that are part of a theme with sequels. As at June 30, 2014, the ledger of Sequel Theatre showed the following: Cash, $17,000; Land, $80,000;

Buildings, $70,000; Equipment, $20,000; Accounts Payable, $5,000; Mortgage Payable, $118,000; and N. Fedkovych,

Capital, $64,000. In July, the following events and transactions occurred:

July 1 Rented the first four Harry Potter movies, to be shown in the first two weeks of July. The film rental was $25,000. Of that amount, $10,000 was paid in cash and the balance will be paid on July 15. 2 Hired M. Brewer to operate the concession stand. Brewer agreed to pay Sequel Theatre 15% of gross concession receipts, on the last day of each month, for the right to operate the concession stand.

3 Paid advertising expenses, $1,150.

14 Received $35,600 cash from customers for admissions.

15 Paid the balance due from the July 1 movie rental transaction.

16 Received the final four Harry Potter movies to be shown in the last two weeks of July. The film rental cost was $30,000. Paid $15,000 cash and the balance will be paid on August 1.

27 Paid the accounts payable owing at the end of June.

30 Paid salaries of $6,200.

31 Received statement from Brewer showing gross receipts from concessions of $27,300 and the balance due to Sequel Theatre of $4,095 ($27,300 3 15%) for July. Brewer paid $2,500 of the balance due and will pay the rest on August 5.

31 Received $42,400 cash from admissions.

31 Made a $1,725 mortgage payment. Of this amount, $1,250 is a principal payment, and $475 is interest on the mortgage.

In addition to the accounts identified above, Sequel Theatre's ledger includes the following: Accounts Receivable;

Admission Revenue; Concession Revenue; Advertising Expense; Film Rental Expense; Interest Expense; and Salaries

Expense.

Instructions

(a) Journalize the July transactions.

(b) Enter the beginning balances in the ledger as at July 1. Use the standard form of account.

(d) Prepare a trial balance at the end of July.

TAKING IT FURTHER A friend of yours is considering buying Sequel Theatre from the current owner. Using the information in the trial balance, comment on whether or not this may be a sound company for your friend to purchase.

Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...