The following independent situations for the Theatre Brunswick for the year ende
ID: 2434601 • Letter: T
Question
The following independent situations for the Theatre Brunswick for the year ended December 31, 2002, may require an original journal entry, an adjusting journal entry, or both.1) Office supplies on hand at the Theatre Brunswick amounted to $640 at the beginning of the year. On July 1, additional office supplies were purchased for cash at a cost of $1,560. At the end of the year, a physical count showed that supplies on hand amounted to $740.
2) At the beginning of January, the theatre borrowed $10,000 from the Bank of Montreal at an annual interest rate of 6%. The principle and interest are to be repaid in two years’ time.
3) Upon reviewing its books on December 31, 2002, it was noted that the telephone bill for the month of December had not yet been received. A call to NBTel yielded the information that the telephone bill was $400.
4) On January 1, 2002, the theatre purchased a used truck for use in its business for $18,000, paying cash in full. Annual amortization is estimated at $3,600.
5) Every Friday, the total payroll for the theatre is $3,000 for employee wages earned during a five-day week (Monday through Friday, inclusive). This year, December 31 falls on a Wednesday. Wages were paid (and recorded) on Friday, December 26. No adjusting entry has yet been recorded for the period from December 26 through December 31.
Instructions
Prepare the journal entry (or entries) required to record (a) the original transaction, and (b) the year-end adjusting entry, if required.
Explanation / Answer
Office supplies 1560 cash 1560 Being office supplies purchased for cash Revenue 1460 Office supplies 1460 Being office supplies utilised during the year Loan 10000 Bank 10000 Being borrowed from bank Bank 5000 Interest on loan 600 cash 5600 Being loan instalment along with interest paid Revenue 600 Interest on loan 600 Being lnterest on loan debited to revenue Telephone bills payable 400 Telephone bills 400 Being telephone bills to be paid for dec Truck 18000 cash 18000 being truck purchased for cash Depreciation on truck 3600 Truck 3600 being depreciation provided at the end of the year Revenue 3600 Depreciation on truck 3600 Being depreciation transferred Wages payable 3000 wages 3000 being provision for wages created at the end of the month revenue 3000 wages payable 3000 being wages payable transferred to revenue
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