Splashtown, Ltd, an amusement park, generates revenue from ticket sales and quar

Question

Splashtown, Ltd, an amusement park, generates revenue from ticket sales and quarterly. At the end of the year, the company also prepares annual financial transactions. The unadusted trial belance at June 30, 2017, the end of the quarter, follows Prepaid Ren Supplies Equipmene Accumulated Depreciation, Equipment Accounts Payable Interest Payable Wages Payable Customer Prepayments lank Loan Payable Share Capltal Retained Earnings Admissions Revenue 9,900 1,200 $12,000 1,200 10,000 28,000 9,630 37,920 6,200 Other Operating Expenses Interest Expense Depreciation Expense Wages Expense 11,600 105.1 $105 100 Additional Data 0 win January 2017, the park pre-paid rent for the next 12 months, indluding January (n) Supplies are expensed when purchased by debiting Other Operating Expenses. At the end of June, it was determined that supplies of $1,000 were still on hand Equipment is being depreciated at $6,000 per year. tiv) It was determined that $5,200 of the admissions revenue related to ticket sales that will be redeemed in July and August. (v) Wages of $1,800 are paid each Friday for a five day work week. June 30 fals on a Thursday. The vendors pay rent to Splashtown Ltd on the first of each month, calculated as 10% of the revenue they earned in theprevious month. The (vi) vendors had earned revenue of $28,000 in the month of June. (vai) The Bank Loan Payable is due in 2019 but requires semi-annual interest payments on January 1 and July 1, The annual interest rate is 6%. Required e) Prepare the adjusting journal entries required for the quarter ending 30 June. There are no account names available other than the ones on the unadjusted trial balance. Narratives are not required Explain why Interest Payable has a balance of $150 on the unadjusted trial balance. Hint: refer to the Conceptual Framework. Why do you think the balance of Interest Expense is nil on the unadjusted trial balance? b) c) Prepare a Statement of Comprehensive Income for the quarter ending 30 June 2017 and the asset section of the Balance Sheet as at 30 June 201 in the form and format prescnibed in this course. You may assume the adjusting entries from a) have been journalised and posted and the balances in the general ledger updated. You do not have to prepare the general ledger. Ignore all taxes

Explanation / Answer

a) ADJUSTING JOURNAL ENTRY Ref Account Title Debit Credit .(i) Other Operating expenses $        3,300 (9900*(3/9) Prepaid rent $    3,300 .(ii) Other Operating Expense $200 Supplies $200 (1200-1000) .(iii) Depreciation expense $1,500 (6000*(3/12) Accumulated depreciation-Equipment $1,500 .(iv) Admission Revenue $5,200 Customer prepayments $5,200 .(v) Wages expense $        1,440 (1800*(4/5) Wages payable $    1,440 .(vi) Accounts receivable $2,800 (0.1*28000) Vendor rental revenue $2,800 .(vii) Interest expense $150 (10000*0.06*(3/12) Interest payable $150 (b) Interest expense of last quarter was not paid but expensed Hence balance of $150 appears as balance payable on unadjusted trial balance Interest expense on unadjusted reial balance is zero since interest upto March of this year has been expensed STATEMENT OF COMPREHENSIVE INCOME For the Quarter ending June 30, 2017 Admission revenue $32,720 (37920-5200) Vendor rental revenue $9,000 (6200+2800) Total revenue $41,720 Expenses: Wages expense $     20,440 (19000+1440) Other operating expenses $     15,100 (11600+3300+200) Interest expense $150 Depreciation expense $1,500 Total expenses $37,190 Net income $4,530 ASSET SECTION OF BALANCE SHEET As on June 30, 2017 Cash $14,400 Accounts Receivable $3,800 (1000+2800) Prepaid rent $        6,600 (9900-3300) Supplies $1,000 (1200-200) Equipment $46,500 (48000-1500) Total Assets $72,300

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