Question 1 The Sarasota Theater is nearing the end of the year and is preparing for a meeting with its bankers to discuss the renewal of a loan The accounts listed below appeared in the December 31, 2017, trial balance Debit Credit Prepaid Advertising $ 6,090 Equipment 163,200 Accumulated Depreciation Equipment $ 57,900 Notes Payable 93,960 Unearned Service Revenue 19,500 Ticket Revenue 395,200 Advertising Expense 19,740 Salaries and Wages Expense 67,200 Interest Expense 1,480 Ignore income taxes Additional information is available as follows 1 The equipment has an estimated useful life of 16 years and a salvage value of $36,800 at the end of that time Sarasota uses the straight line method for depreciation 2 The note payable is a one year note given to the bank January 31 and bearing interest at 10 Interest is calculated on a monthly basis 3 Late in December 2017, the theater sold 390 coupon ticket books at $50 each 150 of these ticket books can be used only for admission any time after January 1, 2018 The cash received was recorded as Unearned Service Revenue 4 Advertising paid in advance was $6,090 and was debited to Prepaid Advertising The company has used $2,530 of the advertising as of December 31, 2017 5 Salaries and wages accrued but unpaid at December 31, 2017, were $3,580 Prepare any adjusting journal entries necessary for the year ended December 31, 2017 (Credit account titles are automatically indented when the amount is entered Do not indent manually ) Determine Sarasotas income before and after recording the adjusting entries (Enter loss using either a negative sign preceding the number e g 45 or parentheses e g (45) )

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 11, 2024

Question 1 The Sarasota Theater is nearing the end of the year and is preparing for a meeting with its bankers to discuss the renewal

Question 1

The Sarasota Theater is nearing the end of the year and is preparing for a meeting with its bankers to discuss the renewal of a loan. The accounts listed below appeared in the December 31, 2017, trial balance.

	Debit		Credit
Prepaid Advertising	$	6,090
Equipment		163,200
Accumulated Depreciation-Equipment			$	57,900
Notes Payable				93,960
Unearned Service Revenue				19,500
Ticket Revenue				395,200
Advertising Expense		19,740
Salaries and Wages Expense		67,200
Interest Expense		1,480

Ignore income taxes. Additional information is available as follows.

1.		The equipment has an estimated useful life of 16 years and a salvage value of $36,800 at the end of that time. Sarasota uses the straight-line method for depreciation.
2.		The note payable is a one-year note given to the bank January 31 and bearing interest at 10%. Interest is calculated on a monthly basis.
3.		Late in December 2017, the theater sold 390 coupon ticket books at $50 each. 150 of these ticket books can be used only for admission any time after January 1, 2018. The cash received was recorded as Unearned Service Revenue.
4.		Advertising paid in advance was $6,090 and was debited to Prepaid Advertising. The company has used $2,530 of the advertising as of December 31, 2017.
5.		Salaries and wages accrued but unpaid at December 31, 2017, were $3,580.

Prepare any adjusting journal entries necessary for the year ended December 31, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Determine Sarasotas income before and after recording the adjusting entries. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)