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Case 3-81 CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT Cam and Anna are very satisfied with their first month of operations. Their major effort centered on signing various artists to live performance contracts, and they had more success than they had anticipated. In addition to Charm City, they were able to use their contacts in the music industry to sign 12 other artists. With the tours starting in February, Cam and Anna were eager to hold their first big event. Over the next month, the following transactions occurred. Feb. 1 Collected advance ticket sales of S28,400 relating to various concerts that were being promoted. 1 Paid S800 to rent office space in February. 2 Paid Equipment Supply Services $1,500, the balance remaining from the January 3 purchase of supplies. 6 Paid $30, 150 to secure venues for future concerts. (These payments are recorded as Prepaid Rent.) 9 Received S325 related to the festival held on January 25. 12 Purchased S475 of supplies on credit from Equipment Supply Services. 15 Collected S3,400 of ticket sales for the first Charm City concert on the day of the concert. 15 Paid Charm City $9,000 for performing the Feb. I S concert. (Remember: Front Row records the fees paid to the artist in the Artist Fee Expense account.) 20 Collected advance ticket sales of $10, 125 relating to various concerts that were being promoted. 21 Collected $5,100 of ticket sales for the second Charm City concert on the day Of the concert. 21 Paid Charm City $12,620 for performing the Feb. 21 concert. At the end of February, Cam and Anna felt like their business was doing well; however, they decided that they needed to prepare financial statements to better understand the operations of the business. Anna gathered the following information relating to the adjusting entries that needed to be prepared at the end of February. Two months of interest on the note payable is accrued. The interest rate is 9%. A Count of the supplies revealed that $1,825 of supplies remained on hand at the end of February. Two months of the annual insurance has expired. Depreciation related to the office equipment was $180 per month. The rental of the venues for all four Charm City concerts was paid in advance on January 8. As of the end of February, Charm City has performed two of the four concerts in the contract. An analysis of the unearned sales revenue account reveals that $8,175 of the balance relates to concerts that have not yet been performed. Neither Cam nor Anna have received their salary of $1,200 each for February. A utility bill of $435 relating to utility service on Front Row’s office for January and February was received but not paid by the end of February. Required: Set up T-accounts for each account. and post the transactions to the T-accounts. Be sure to use the balances computed in Chapter 2 as the beginning balances of the T-accounts.

BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 3, Problem 81.2C
Textbook Problem

Case 3-81 CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT

Cam and Anna are very satisfied with their first month of operations. Their major effort centered on signing various artists to live performance contracts, and they had more success than they had anticipated. In addition to Charm City, they were able to use their contacts in the music industry to sign 12 other artists. With the tours starting in February, Cam and Anna were eager to hold their first big event. Over the next month, the following transactions occurred.

Feb. 1 Collected advance ticket sales of S28,400 relating to various concerts that were being promoted.

1 Paid S800 to rent office space in February.

2 Paid Equipment Supply Services $1,500, the balance remaining from the January 3 purchase of supplies.

6 Paid $30, 150 to secure venues for future concerts. (These payments are recorded as Prepaid Rent.)

9 Received S325 related to the festival held on January 25.

12 Purchased S475 of supplies on credit from Equipment Supply Services.

15 Collected S3,400 of ticket sales for the first Charm City concert on the day of the concert.

15 Paid Charm City $9,000 for performing the Feb. I S concert. (Remember: Front Row records the fees paid to the artist in the Artist Fee Expense account.)

20 Collected advance ticket sales of $10, 125 relating to various concerts that were being promoted.

21 Collected $5,100 of ticket sales for the second Charm City concert on the day Of the concert.

21 Paid Charm City $12,620 for performing the Feb. 21 concert.

At the end of February, Cam and Anna felt like their business was doing well; however, they decided that they needed to prepare financial statements to better understand the operations of the business. Anna gathered the following information relating to the adjusting entries that needed to be prepared at the end of February.

  1. Two months of interest on the note payable is accrued. The interest rate is 9%.
  2. A Count of the supplies revealed that $1,825 of supplies remained on hand at the end of February.
  3. Two months of the annual insurance has expired.
  4. Depreciation related to the office equipment was $180 per month.
  5. The rental of the venues for all four Charm City concerts was paid in advance on January 8. As of the end of February, Charm City has performed two of the four concerts in the contract.
  6. An analysis of the unearned sales revenue account reveals that $8,175 of the balance relates to concerts that have not yet been performed.
  7. Neither Cam nor Anna have received their salary of $1,200 each for February.
  8. A utility bill of $435 relating to utility service on Front Row’s office for January and February was received but not paid by the end of February.

Required:

Set up T-accounts for each account. and post the transactions to the T-accounts. Be sure to use the balances computed in Chapter 2 as the beginning balances of the T-accounts.

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Chapter 3 Solutions

Cornerstones of Financial Accounting
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