The following independent events for New Age Theatre Ltd. during the year ended

Problem 4-4A

The following independent events for New Age Theatre Ltd. during the year ended November 30, 2012, require a journal entry for the dates mentioned below or an adjusting journal entry, or both. The company adjusts its accounts annually.

1.		On December 1, 2011, the theatre purchased vehicles for $80,970 cash. The vehicles’ estimated useful life is five years.
2.		On June 1, 2012, the theatre borrowed $109,210 from the Bank of Montreal at an interest rate of 9%. The principal is to be repaid in one year. The interest is payable the first of each month.
3.		The theatre has eight plays each season. This year’s season started in October 2012 and ends in May 2013 (one play per month). Season tickets sell for $210. On October 1, 490 season tickets were sold for the 2012–2013 season. The Theatre credited Unearned Revenue for the full amount received on October 1 and uses an Admission Revenue account to record revenue earned from season tickets.
4.		Supplies on hand amounted to $1,980 at the beginning of the year. On February 17, additional Supplies were purchased for cash at a cost of $3,150. At the end of the year, a physical count showed that supplies on hand amounted to $630.
5.		The New Age Theatre rents its facilities for $440 a month to a local dance club that uses the space for rehearsals. On November 2, the club’s treasurer accidentally sent a cheque for only $310 for the November rent. She promised to send a cheque in December for the balance when she returned from vacation. On December 4, the theatre received a cheque for the balance owing from November plus all of December’s rent.
6.		The total weekly payroll is $7,220, paid every Monday for employee salaries earned during the prior seven-day week (Sunday to Saturday). Salaries were last paid (and recorded) on Monday, November 26. This year, November 30 falls on a Friday.
7.		Upon reviewing its books on November 30, the theatre noted that the utility bill for the month of November had not yet been received. A call to Hydro-Québec determined that the amount owed was $1,280. The bill was paid on December 10.

 

 

Prepare the journal entry to record the original transaction for items 1, 2, 3, 4, and 5. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Prepare the year-end adjusting entry required for items 1 through 7 on November 30. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round all amounts to the nearest dollar.)

Record the subsequent cash transactions in December for (1) the interest paid on December 1 (item 2), (2) the cheque received on December 4 (item 5), (3) the payroll paid on December 3 (item 6), and (4) the payment of the utility bill on December 10 (item 7). (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

 

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