The Star-Lite Theater Inc. was recently formed. It began operations in March 201

Question

The Star-Lite Theater Inc. was recently formed. It began operations in March 2010. The Star-Lite is unique in that it will show only triple features of sequential theme movies. On March 1, the ledger of The Star-Lite showed: Cash $16,000; Land $38,000; Buildings (concession stand, projection room, ticket booth, and screen) $22,000; Equipment $16,000; Accounts Payable $12,000; and 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 three weeks of March. The film rental was $10,000; $2,000 was paid in cash and $8,000 will be paid on March 10.
3 Ordered the first three Star Trek movies to be shown the last 10 days of March. It will cost $400 per night.
9 Received $9,200 cash from admissions.
10 Paid balance due on Star Wars movies rental and $2,600 on March 1 accounts payable.
11 Hired J. Carne to operate concession stand. Carne agrees to pay The Star-Lite Theater 15% of gross receipts, payable monthly.
12 Paid advertising expenses $900.
20 Received $7,100 cash from customers for admissions.
20 Received the Star Trek movies and paid rental fee of $4,000.
31 Paid salaries of $3,800.
31 Received statement from J. Carne showing gross receipts from concessions of $10,000 and the balance due to The Star-Lite of $1,500 for March. Carne paid half the balance due and will remit the remainder on April 5.
31 Received $20,000 cash from customers for admissions.


Date Account/Description Debit Credit
Mar. 2 Film rental expense 10000
Accounts payable 8000
Cash 2000
Mar. 3 No entry 0
No entry 0
Mar. 9 Cash 9200
Admission revenue 9200
Mar. 10 Accounts payable _____
Cash ____
Mar. 11 No entry 0
No entry 0
Mar. 12 Advertising expense 900
Cash 900
Mar. 20 Cash 7100
Admission revenue 7100
Mar. 20 Film rental expense 4000
Cash 4000
Mar. 31 Salaries expense 3800
Cash 3800
Mar. 31 Accounts receivable _____
Cash 750
Concession revenue 1500
Mar. 31 Cash 20000
Admission revenue 20000

Explanation / Answer

mar2: Credit cash 2000 because cash goes down., Credit Accounts payable because you owe, so to increase a payable you credit. 8000 mar3: You ordered but didn't pay yet, so simply increase a payable. Credit 4000 to AP mar9: You got cash, so to increase an asset debit it. +9200 credit revenue 9200 mar10: You paid your payables one which was from mar 2 for 8000, the other from mar1 for 2600, debit both payables to decrease money owed. mar11: No Entry mar12: paid expense for 900, credit your cash for 900 mar20: debit cash for 7100 and credit revenue 7100 mar20: debit expense for 4000 and credit cash for 4000 (no net effect) mar31: debit wages expense for 3800, credit cash for 3800 mar31: debit cash 5000, debit accounts receivable 5000 and credit to ap for 1500 mar31. debit cash 20000 and credit revenue 20000

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