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Tutorial Test 2 Question

The Starr Theater began operations in March, showing triple feature theme movie packages. On March 1, the theater's ledger showed $3,000 in cash, $24,000 in land, $10,000 in buildings, $10,000 in equipment, $7,000 in accounts payable, and $40,000 in owner's capital. During March, the theater rented movies, paid expenses, received admissions revenue, and contracted with a concession operator. By March 31, admissions revenue totaled $18,300 and concession revenue was $6,000 for the month.

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111 views2 pages

Tutorial Test 2 Question

The Starr Theater began operations in March, showing triple feature theme movie packages. On March 1, the theater's ledger showed $3,000 in cash, $24,000 in land, $10,000 in buildings, $10,000 in equipment, $7,000 in accounts payable, and $40,000 in owner's capital. During March, the theater rented movies, paid expenses, received admissions revenue, and contracted with a concession operator. By March 31, admissions revenue totaled $18,300 and concession revenue was $6,000 for the month.

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Xuân Thành Trần Hồ
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© © All Rights Reserved
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TUTORIAL TEST 2

The Starr Theater, owned by Meg Vargo, will begin operations in March. The Starr will
be unique in that it will show only triple features of sequential theme movies. As of March
1, the ledger of Starr showed: No. 101 Cash $3,000, No. 140 Land $24,000, No. 145
Buildings (concession stand, projection room, ticket booth, and screen) $10,000, No. 157
Equipment $10,000, No. 201 Accounts Payable $7,000, and No. 301 Owner’s Capital
$40,000. During the month of March, the following events and transactions occurred.

Mar. 2 Rented the three Indiana Jones movies to be shown for the first 3 weeks
of March. The film rental was $3,500; $1,500 was paid in cash and
$2,000 will be paid on March 10.
3 Ordered the Lord of the Rings movies to be shown the last 10 days of
March. It will cost $200 per night.
9 Received $4,300 cash from admissions.
10 Paid balance due on Indiana Jones movies rental and $2,100 on March 1
accounts payable.
11 Starr Theater contracted with Adam Ladd to operate the concession stand.
Ladd is to pay 15% of gross concession receipts, payable monthly, for the
rental of the concession stand.
12 Paid advertising expenses $900.
20 Received $5,000 cash from customers for admissions.
20 Received the Lord of the Rings movies and paid the rental fee of $2,000.
31 Paid salaries of $3,100.
31 Received statement from Adam Ladd showing gross receipts from
concessions of $6,000 and the balance due to Starr Theater of $900
($6,000 3 15%) for March. Ladd paid one-half the balance due and will
remit the remainder on April 5.
31 Received $9,000 cash from customers for admissions.

In addition to the accounts identified above, the chart of accounts includes: No. 112
Accounts Receivable, No. 400 Service Revenue, No. 429 Rent Revenue, No. 610
Advertising Expense, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.
Instructions
a) Open a T-account for each transaction.
b) Journalize the March transactions. Starr records admission revenue as service
revenue, rental of the concession stands as rent revenue, and film rental expense as
rent expense.
c) Post the March journal entries to T-accounts. Assume that all entries are posted from
page 1 of the journal.
d) Prepare a trial balance on March 31, 2017
e) Prepare the Income Statement, Statement of Changes in Equity for the month ended
March 31, 2017 and Balance Sheet on March 31, 2017

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