The following accounts appeared in the December 31 trial balance of the Majestic Theatre:

Instructions
(a) From the account balances above and the information that follows, prepare the annual adjusting entries necessary on December 31:
1. The equipment has an estimated life of 16 years and a residual value of $40,000. (Use the straight-line method.)
2. The note payable is a 90-day note given to the bank on October 20 and bearing interest at 10%.
3. In December, 2,000 coupon admission books were sold at $25 each; they can be used for admission any time after January 1.
4. Of the Advertising Expense balance, 1,100 is paid in advance.
5. Salaries accrued but unpaid are $11,800.
(b) 'What amounts should be shown for each of the following on the income statement for the year?
1. Interest expense
2. Sales revenue
3. Advertising expense
4. Salaries and wages expense

Transcribed Image Text:

Debit $960,000 Credit Equipment Accumulated depreciation-equipment Notes payaole Sales revenue Advertising expense Salaries and wages expense Interest expense $120,000 186,000 750,000 62,000 80,000 9,000