Among the ledger accounts used by Rapid Speedway are the following: Prepaid Rent, Rent Expense, Unearned Admissions Revenue, Admissions Revenue, Prepaid Printing, Printing Expense, Concessions Receivable, and Concessions Revenue. For each of the following items, provide the journal entry (if one is needed) to record the initial transaction and provide the adjusting entry, if any, required on May 31, assuming the company makes adjusting entries monthly. a. On May 1, borrowed $320,000 cash from National Bank by issuing a 9 percent note payable due in three months. b. On May 1, paid rent for six months beginning May 1 at $28,000 per month. c. On May 2, sold season tickets for a total of $950,000 cash. The season includes 60 racing days: 15 in May, 20 in June, and 25 in July. d. On May 4, an agreement was reached with Snack-Bars, Inc., allowing that company to sell refreshments at the track in return for 10 percent of the gross receipts from refreshment sales.

Question

Guest

Business

22 February, 09:51

Among the ledger accounts used by Rapid Speedway are the following: Prepaid Rent, Rent Expense, Unearned Admissions Revenue, Admissions Revenue, Prepaid Printing, Printing Expense, Concessions Receivable, and Concessions Revenue. For each of the following items, provide the journal entry (if one is needed) to record the initial transaction and provide the adjusting entry, if any, required on May 31, assuming the company makes adjusting entries monthly. a. On May 1, borrowed $320,000 cash from National Bank by issuing a 9 percent note payable due in three months. b. On May 1, paid rent for six months beginning May 1 at $28,000 per month. c. On May 2, sold season tickets for a total of $950,000 cash. The season includes 60 racing days: 15 in May, 20 in June, and 25 in July. d. On May 4, an agreement was reached with Snack-Bars, Inc., allowing that company to sell refreshments at the track in return for 10 percent of the gross receipts from refreshment sales.

+1

Answers (1)

Know the Answer?

Lizeth Carpenter · Answer 1

Date Particulars Dr Cr

May 1 Cash $ 320,000

Notes Payable $ 320,000

Maturity 3 months

May 1 Prepaid Rent $ 168,000

Rent Expense $ 168,000

May 2 Admissions Revenue $ 950,000

Unearned Admissions Revenue $ 950,000

May 4 Concessions Receivable 10 % Of sales

Concessions Revenue 10 % of Sales

Adjusting Entries On May 31st

Sr. No Particulars Dr. Cr.

1. Interest Expense $ 2400

Interest Payable $ 2400

To record the accrued interest on notes payable $320,00 * 9/100 = $ 28,800

Interest for one month would be $ 28,800/12 = $ 2400

2. Rent Expense $ 28,000

Prepaid Rent $ 28,000

Adjusting entry of rent for the month of May.

3 Unearned Admission Revenue $ 142,500

Admissions Revenue Earned $ 142,500

Revenue Earned in May (Tickets being used in May = $ 950,000 / 100 * 15)

4. Cash 10 % Of sales

Concessions Receivable 10 % of Sales

10 % of sales made.