Question

Front Row has the following selected balances at the February 29, 2012:
The following information is not reflected in these balances:
a. On February 29, 2012, Front Row Entertainment accepted delivery of $5,325 of live- performance DVDs from their supplier. Front Row has not yet paid the supplier.
b. On February 1, Front Row Entertainment purchased $8,000 of equipment for its Chicago Music House venue by issuing a one-year note payable bearing 10 percent interest. Front Row has not made any journal entries related to this transaction and should accrue for this at month’s end. (Note: Round any calculations to the nearest dollar.)
c. Front Row Entertainment collected $3,745 of advance ticket sales related to an upcoming concert. This price included 7 percent state sales tax.
d. Amanda Wilson was paid $2,000 in wages to update and monitor the online fan communities. Federal and state unemployment taxes are $16 and $108, respectively. Amanda is below the Social Security minimum. In addition, $375 of income taxes were withheld. In addition, several individuals were injured during a concert in February when they pushed past security and rushed the stage. A personal injury lawsuit was filed against Front Row Entertainment in the amount of $250,000. After investigating the incident and consultation with legal counsel, it was determined that the likelihood of a judgment against Front Row was remote.
Required:
1. Prepare the necessary journal entries for a through d (Note: Round all calculations to the nearest dollar).
2. Determine the current ratio before and after the additional information.
3. How should this contingent event be recorded?


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  • CreatedSeptember 22, 2015
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