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Campus Theater adjusts its accounts every month. Below is...open 1
Principles of Financial Accounting (ACCT 100)
Lahore University of Management Sciences
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Campus Theater adjusts its accounts every month. Below is the company’s unadjusted trial balance dated August 31, 2011. Additional information is provided for use in preparing the company’s adjusting entries for the month of August. (Bear in mind that adjusting entries have already been made for the first seven months of 2011, but not for August.)
Other Data Film rental expense for the month is $15,200. However, the film rental expense for several months has been paid in advance. . The building is being depreciated over a period of 20 years (240 months). . The fixtures and equipment are being depreciated over a period of five years (60 months). . On the first of each month, the theater pays the interest that accrued in the prior month on its note payable. At August 31, accrued interest payable on this note amounts to $1,500. . The theater allows the local YMCA to bring children attending summer camp to the movies on any weekday afternoon for a fixed fee of $500 per month. On June 28, the YMCA made a $1,500 advance payment covering the months of July, August, and September. . The theater receives a per centage of the revenue earned by Tastie Corporation, the concessionaire operating the snack bar. For snack bar sales in August, Tastie owes Campus Theater
Campus Theater adjusts its accounts every month. Below is the company’s unadjusted
trial balance...
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$2,250, payable on September 10. No entry has yet been made to record this revenue. (Credit Concessions Revenue.) . Salaries earned by employees, but not recorded or paid as of August 31, amount to $1,700. No entry has yet been made to record this liability and expense. . Income taxes expense for August is estimated at $4,200. This amount will be paid in the September 15 instalment payment. . Utilities expense is recorded as monthly bills are received. No adjusting entries for utilities expense are made at month-end. Instructions . For each of the numbered paragraphs, prepare the necessary adjusting entry (including an explanation). . Refer to the balances shown in the unadjusted trial balance at August 31. How many months of expense are included in each of the following account balances? (Remember, Campus Theater adjusts its accounts monthly. Thus, the accounts shown were last adjusted on July 31, 2011.) Utilities Expense . Depreciation Expense . Accumulated Depreciation: Building . Assume the theater has been operating profitably all year. Although the August 31 trial balance shows substantial income taxes expense, income taxes payable is a much smaller amount. This relationship is quite normal throughout much of the year. Explain.
Feb 06 2021 | 12:05 PM |
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Magnus Robel 8 Votes 2504 Answers a. General Journal (Adjusting Entries) 2015 (1) Aug Rental Expense 15,
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Income Taxes Payable 4, To record income taxes accrued in August. (9) 31No adjusting entry required. b. (1) Eight months (bills received January through August). Utilities bills are recorded as monthly bills are received. As of August 31, eight monthly bills should have been received. (2) Seven months (January through July). Depreciation expense is recorded only in month- end adjusting entries. Thus, depreciation for August is not included in the August unadjusted trial balance. (3) Twenty months ($14,000/$700 per month). c. Corporations must pay income taxes in several installments throughout the year. The balance in the Income Taxes Expense account represents the total amount of income taxes expense recognized since the beginning of the year. But Income Taxes Payable represents only the portion of this expense that has not yet been paid. In the example at hand, the $4,740 in income taxes payable probably represents only the income taxes expense accrued in July, as Campus Theater should have paid taxes accrued in the first two quarters by June 15.
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Campus Theater adjusts its accounts every month. Below is...open 1
Course: Principles of Financial Accounting (ACCT 100)
University: Lahore University of Management Sciences
