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 $12,620 for performing the Feb. 21 concert.
At the end of February, Cam and Anna felt like their business was doing well; however, they decided that they needed to prepare financial statements to better understand the operations of the business. Anna gathered the following information relating to the adjusting entries that needed to be prepared at the end of February.
Required:
Set up T-accounts for each account. and post the transactions to the T-accounts. Be sure to use the balances computed in Chapter 2 as the beginning balances of the T-accounts.
To prepare: T accounts and to post the journal entries of the February month.
Introduction: Journal entries in respect of each account is posted to its respective T account. T accounts are ledger accounts prepared to ascertain the transactions entered in respect of each account and to obtain its closing balance thereafter.
Preparation of cash account in general ledger:
Cash | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 14,100 | |||
February, 1 | Unearned sales revenue | 28,400 | 42,500 | ||
February, 1 | Rent expense | 800 | 41,700 | ||
February, 2 | Accounts payable | 1,500 | 40,200 | ||
February, 6 | Prepaid rent | 30,150 | 10,050 | ||
February, 9 | Accounts receivable | 325 | 10,375 | ||
February, 15 | Sales revenue | 3,400 | 13,775 | ||
February, 15 | Artist fee expense | 9,000 | 4,775 | ||
February, 20 | Unearned sales revenue | 10,125 | 14,900 | ||
February, 21 | Sales revenue | 5,100 | 20,000 | ||
February, 21 | Artist fee expense | 12,620 | 7,380 |
   Table (1)
Preparation of accounts receivable account in general ledger:
Accounts receivable | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 400 | |||
February, 9 | Cash | 325 | 75 |
   Table (2)
Preparation of supplies account in general ledger:
Supplies | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 2,500 | |||
February, 12 | Accounts payable | 475 | 2,975 |
   Table (3)
Preparation of prepaid insurance account in general ledger:
Prepaid insurance | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 3,600 |
   Table (4)
Preparation of prepaid rent account in general ledger:
Prepaid rent | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 10,000 | |||
February, 6 | Cash | 30,150 | 40,150 |
   Table (5)
Preparation of equipment account in general ledger:
Equipment | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | 7,000 |
   Table (6)
Preparation of accounts payable account in general ledger:
Accounts payable | |||||
Date | Particular | Post Ref. | Debit($) | Credit($) | Balance($) |
February, 1 | Balance | ||||
February, 2 | Cash | 1,500 | 0 | ||
February, 12 | Supplies | 475 |
   Table (7)
Preparation of unearned sales revenue account in general ledger:
Unearned sales revenue | |||||
Date | Particular | Post Ref |
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