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The following independent events for Repertory Theatre Ltd. during the year ended December 31, 2021, require a transaction journal entry or an adjusting journal entry,
The following independent events for Repertory Theatre Ltd. during the year ended December 31, 2021, require a transaction journal entry or an adjusting journal entry, or both. The company adjusts its accounts annually.
- Supplies on hand amounted to $1,500 at the beginning of the year. On March 1, additional supplies were purchased for $4,250 cash. At the end of the year, a physical count showed that supplies on hand amounted to $1,000.
- The theatre owns a vehicle that was purchased on January 2, 2021, for $120,000. The vehicles estimated useful life is four years.
- The theatre has nine plays each season, which starts in September 2021 and ends in May 2022 (one play per month). Season tickets sell for $360. On August 2, 600 season tickets were sold for the upcoming 20212022 season. The theatre credited Deferred Revenue for the full amount received on August 2 and uses a Ticket Revenue account to record revenue earned from season tickets.
- On June 1, the theatre borrowed $30,000 from La Caisse Populaire Desjardins at an interest rate of 6%, to be repaid in one year. The interest is payable on the first day of each following month, and was last paid on December 1.
- The total biweekly payroll is $9,000, paid every other Friday for employee salaries earned during the prior 12-day workweek (Saturday to Thursday). This year, December 31 falls on a Friday. Salaries were last paid (and recorded) on Friday, December 24, and will be paid next on Friday, January 7.
- Repertory Theatre rents a portion of its facilities for $600 a month to a local seniors choir that uses the space for rehearsals. The choirs treasurer was ill during December, and on January 7, the theatre received a $1,200 cheque for both the amount owing for the month of December and the rent for the month of January.
- Upon reviewing its books on December 31, the theatre noted that a telephone bill for the month of December had not yet been received. A call to Bell Aliant determined that the telephone bill was for $1,125. The bill was paid on January 11. (Hint: Use the Utilities Expense account for telephone services.)
Instructions
- Prepare the journal entries to record the original transactions for items 1, 2, 3, and 4.
- Prepare the year-end adjusting entries required for items 1 through 7 on December 31.
- Record the subsequent cash transactions in January for (1) the interest paid on January 1 (item 4), (2) payment of the payroll on January 7 (item 5), (3) receipt of the rent on January 7 (item 6), and (4) payment of the telephone bill on January 11 (item 7).
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