Problem: 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.)
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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.)
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3 In December 1,500 coupon admission books were sold at $25 each. They could be used for admission any time after January 1.
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4 Advertising expense paid in advance and included in Advertising Expense $1,600.
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5 Salaries accrued but unpaid of $5,300.
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(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