(Adjusting Entries) The accounts listed below appeared in the December 31 trial balance of the Savard Theater. Debit Credit
Equipment $192,000
Accumulated Depreciation—Equipment $ 60,000
Notes Payable 90,000
Admissions Revenue 380,000
Advertising Expense 13,680
Salaries Expense 57,600
Interest Expense 1,400
From the account balances listed above and the information given below, prepare the annual adjusting entries necessary on December 31. (Omit explanations)
1) The equipment has an estimated life of 16 years and a salvage value of $24,000 at the end of that time.
2) The note payable is a 90-day note given to the bank on October 20 and bearing interest at 8%.
3) In December, 2,000 coupon admission books were sold at $30 each and recorded as Admissions Revenue. They could be used for admission any time after January 1.
4) Advertising expense paid in advance and included in Advertising Expense $1,100.
5) Salaries and wages accrued but unpaid $4,700.

1) The equipment has an estimated life of 16 years and a salvage value of $24,000 at the end of that time.

depreciation expense per year = ($192,000 - $24,000) / 16 = $10,500

Dr Depreciation expense 10,500

    Cr Accumulated depreciation 10,500

2) The note payable is a 90-day note given to the bank on October 20 and bearing interest at 8%.

using a 360 day year, accrued interest = $90,000 x 8% x 72/360 days = $1,440

Dr Interest expense 1,440

    Cr Interest payable 1,440

3) In December, 2,000 coupon admission books were sold at $30 each and recorded as Admissions Revenue. They could be used for admission any time after January 1.

Dr Admissions revenue 60,000

    Cr Deferred revenue 60,000

4) Advertising expense paid in advance and included in Advertising Expense $1,100.

Dr Advertising expense 1,100

    Cr Prepaid advertising expense 1,100

5) Salaries and wages accrued but unpaid $4,700.

Dr Wages expense 4,700

    Cr Wages payable 4,700

answer; the correct answer is (0.08);

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