Acc421 Intermediate Accounting: Week 2 Team Assignment (P3-5 and P3-10)

Acc421 Intermediate Accounting Week 2 Team Assignment (P3-5 and P3-10) P3-5 (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 Instructions (a) 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. (Use straight-line method.) 2. The note payable is a 90-day note given to the bank October 20 and bearing interest at 8%. (Use 360 days for denominator.) 3. In December 2,000 coupon admission books were sold at $30 each. They could be used for admission any time after January 1. 4. Advertising expense paid in advance and included in Advertising Expense $1,1005. Salaries accrued but unpaid $4,700. (b) What amounts should be shown for each of the following on the income statement for the year? 1. Interest expense. 2. Admissions revenue. 3. Advertising expense. 4. Salaries expense. P3-10 (Adjusting and Closing) Presented below is the December 31 trial balance of New York Boutique. NEW YORK BOUTIQUE TRIAL BALANCE December 31 Debit Credit Cash 18,500 Accounts Receivable 32,000 Allowance for Doubtful Accounts 700 Inventory, December 31 80,000 Prepaid Insurance 5,100 Equipment 84,000 Accumulated Depreciation - Equipment 35,000 Notes Payable 28,000 Common Stock 80,600 Retained Earnings 10,000 Sales Revenue 600,000 Cost of Goods Sold 408,000 Salaries and Wages (Sales) 50,000 Advertising Expense 6,700 Salaries and Wages (Administrative) 65,000 Supplies Expense 5,000 $754,300 $754,300 Instructions: a. Construct T-accounts and enter balances shown. b. Prepare adjusting journal entries for the following and post to the T-Accounts 1. Bad debt expense is estimated to be $1,400. 2. Equipment is depreciated based on a 7-year life (no salvage value). 3. Insurance expired during the year $2,550. 4. Interest accrued on notes payable $3,360. 5. Sales salaries and wages earned but not paid $2,400. 6. Advertising paid in advance $700. 7. Office supplies on hand $1,500, charged to Supplies Expense when purchased. c. Prepare closing entries and post to the accounts.
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