Thursday, 26 July 2012

Problem 2-5B

The Quinn Theater, owned by Mike Quinn, will begin operations in March.The Quinn will be unique in that it will show only triple features of sequential theme movies. As of March 1, the ledger of Quinn showed:No. 101 Cash $16,000;No. 140 Land $42,000;No. 145 Buildings (concession stand, projection room, ticket booth, and screen) $18,000; No. 157 Equipment $16,000; No. 201 Accounts Payable $12,000; and No. 311 Common Stock $80,000. During the month of March the following events and transactions occurred.

Mar. 2 Rented the three Star Wars movies (Star Wars, The Empire Strikes Back, and The Return of the Jedi) to be shown for the first 3 weeks of March. The film rental was $6,000; $3,000 was paid in cash and $3,000 will be paid on March 10.

3 Ordered the first three Star Trek movies to be shown the last 10 days of March. It willcost $300 per night.

9 Received $6,500 cash from admissions.

10 Paid balance due on Star Wars movies rental and $4,000 on March 1 accounts payable.

11 Quinn Theater contracted with M. Brewer Company to operate the concession stand. Brewer is to pay 10% of gross concession receipts (payable monthly) for the right to operate the concession stand.

12 Paid advertising expenses $800.

20 Received $7,200 cash from customers for admissions.

20 Received the Star Trek movies and paid the rental fee of $3,000.

31 Paid salaries of $4,800.

31 Received statement from M. Brewer showing gross receipts from concessions of $8,000 and the balance due to Quinn Theater of $800 ($8,000 10%) for March. Brewer paid one-half the balance due and will remit the remainder on April 5.

31 Received $11,000 cash from customers for admissions.

In addition to the accounts identified above, the chart of accounts includes: No. 112 Accounts Receivable, No. 405 Admission Revenue, No. 406 Concession Revenue, No. 610 Advertising Expense, No. 632 Film Rental Expense, and No. 726 Salaries Expense.

(a) Enter the beginning balances in the ledger. Insert a check mark (✓) in the reference column of the ledger for the beginning balance.
(b) Journalize the March transactions.
(c) Post the March journal entries to the ledger. Assume that all entries are posted from page 1of the journal.
(d) Prepare a trial balance on March 31, 2008

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