Problem 2-5A (Part Level Submission) The Starr Theater, owned by Meg Vargo, will

Question

Problem 2-5A (Part Level Submission)

The Starr Theater, owned by Meg Vargo, will begin operations in March. The Starr will be unique in that it will show only triple features of sequential theme movies. As of March 1, the ledger of Starr showed: Cash $2,950, Land $24,000, Buildings (concession stand, projection room, ticket booth, and screen) $12,000, Equipment $12,000, Accounts Payable $6,400, and Owner’s Capital $44,550. During the month of March, the following events and transactions occurred.

31 Received $9,600 cash from customers for admissions

Journalize the March transactions. Starr records admission revenue as service revenue, rental of the concession stand as rent revenue, and film rental expense as rent expense. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

Mar. 31

Mar. 2 Rented the three Indiana Jones movies to be shown for the first 3 weeks of March. The film rental was $3,400; $1,500 was paid in cash and $1,900 will be paid on March 10. 3 Ordered the Lord of the Rings movies to be shown the last 10 days of March. It will cost $190 per night. 9 Received $4,400 cash from admissions. 10 Paid balance due on Indiana Jones movies rental and $2,000 on March 1 accounts payable. 11 Starr Theater contracted with Adam Ladd to operate the concession stand. Ladd is to pay 15% of gross concession receipts, payable monthly, for the rental of the concession stand. 12 Paid advertising expenses $900. 20 Received $5,300 cash from customers for admissions. 20 Received the Lord of the Rings movies and paid the rental fee of $1,900. 31 Paid salaries of $2,800. 31 Received statement from Adam Ladd showing gross receipts from concessions of $7,000 and the balance due to Starr Theater of $1,050 ($7,000 × 15%) for March. Ladd paid one-half the balance due and will remit the remainder on April 5.

31 Received $9,600 cash from customers for admissions

Explanation / Answer

Solution:

Journal Entries - Star Theater Date Particulars Debit Credit 2-Mar Rental Expense Dr $3,400.00         To Cash $1,500.00         To Accounts Payable $1,900.00 (Rental film for cash and on account) 3-Mar No Entry 9-Mar Cash Dr $4,400.00         To Service Revenue $4,400.00 (Being cash received for service performed) 10-Mar Accounts Payable Dr $3,900.00         To Cash $3,900.00 (Being paid to creditors on account) 11-Mar No Entry 12-Mar Advertising Expense Dr $900.00         To Cash $900.00 (Being advertising expenses paid) 20-Mar Cash Dr $5,300.00         To Service Revenue $5,300.00 (Being cash received for service performed) 20-Mar Rental Expense Dr $1,900.00         To Cash $1,900.00 (Being paid for film rental) 31-Mar Salaires Expense Dr $2,800.00         To Cash $2,800.00 (Being cash paid for salary) 31-Mar Cash Dr $525.00 Accounts Receivables Dr $525.00         To Rent Revenue $1,050.00 (Being Received cash and balance on account for rent revenue) 31-Mar Cash Dr $9,600.00         To Service Revenue $9,600.00 (Being cash received for service performed)

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