BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

Solutions

Chapter
Section
BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
1 views

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.

To determine

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.

Explanation

Preparation of cash account in general ledger:

    Cash
    DateParticularPost Ref.Debit($)Credit($)Balance($)
    February, 1 Balance14,100
    February, 1Unearned sales revenue28,40042,500
    February, 1Rent expense80041,700
    February, 2Accounts payable1,50040,200
    February, 6Prepaid rent30,15010,050
    February, 9Accounts receivable32510,375
    February, 15Sales revenue3,40013,775
    February, 15Artist fee expense9,0004,775
    February, 20Unearned sales revenue10,12514,900
    February, 21Sales revenue5,10020,000
    February, 21Artist fee expense12,6207,380

   Table (1)

Preparation of accounts receivable account in general ledger:

    Accounts receivable
    DateParticularPost Ref.Debit($)Credit($)Balance($)
    February, 1 Balance400
    February, 9Cash32575

   Table (2)

Preparation of supplies account in general ledger:

    Supplies
    DateParticularPost Ref.Debit($)Credit($)Balance($)
    February, 1 Balance2,500
    February, 12Accounts payable4752,975

   Table (3)

Preparation of prepaid insurance account in general ledger:

    Prepaid insurance
    DateParticularPost Ref.Debit($)Credit($)Balance($)
    February, 1 Balance3,600

   Table (4)

Preparation of prepaid rent account in general ledger:

    Prepaid rent
    DateParticularPost Ref.Debit($)Credit($)Balance($)
    February, 1 Balance10,000
    February, 6Cash30,15040,150

   Table (5)

Preparation of equipment account in general ledger:

    Equipment
    DateParticularPost Ref.Debit($)Credit($)Balance($)
    February, 1 Balance7,000

   Table (6)

Preparation of accounts payable account in general ledger:

    Accounts payable
    DateParticularPost Ref.Debit($)Credit($)Balance($)
    February, 1 Balance(1,500)
    February, 2Cash1,5000
    February, 12Supplies475(475)

   Table (7)

Preparation of unearned sales revenue account in general ledger:

    Unearned sales revenue
    DateParticularPost Ref

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Describe this textbooks three themes.

Accounting Information Systems

Define net exports and net capital outflow. Explain how and why they are related.

Brief Principles of Macroeconomics (MindTap Course List)

What are the major elements of Herzbergs motivationhygiene theory?

Foundations of Business (MindTap Course List)

What are the three basic operations in cryptography?

Principles of Information Security (MindTap Course List)

What is a relational diagram? Give an example.

Database Systems: Design, Implementation, & Management

What is connectivity? (Use a Crows Foot ERD to illustrate connectivity.)

Database Systems: Design, Implementation, & Management

What is meant by the phrase consumerization of IT?

Principles of Information Systems (MindTap Course List)

VocabularyState the meaning of the following terms: Outcome _____ A Population _____ Frequency Distribution ___...

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

Explain why a height-sensing proportioning valve is required on some vehicles.

Automotive Technology: A Systems Approach (MindTap Course List)

How has technology changed in recent years? Provide of traditional, evolving and emerging technology.

Systems Analysis and Design (Shelly Cashman Series) (MindTap Course List)

Determine the magnitudes of the roller reactions at C and D. Neglect the weights of the members.

International Edition---engineering Mechanics: Statics, 4th Edition

List uses for Bluetooth devices. Name advantages and disadvantages of using Bluetooth.

Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)