E4-3 Recording Initial Transactions and Subsequent Adjustments [LO 4-1, Lo 4-2]

Question

E4-3 Recording Initial Transactions and Subsequent Adjustments [LO 4-1, Lo 4-2] During the month of September, the Texas Go-Kart Company had the following business activities: a. On September 1, paid rent on the track facility for six months at a total cost of $7,200. b. On September 1, received $45,600 for season tickets for 12-month admission to the race track. On September 1, booked the race track for a private organization that will use the track one day per month for $1,700 each time, to be paid in the following month. The organization uses the track on September 30. d. On September 1, hired a new manager at a monthly salary of $2,300, to be paid the first Monday following the end of the month. Required: 1. Prepare the journal entry, if any, required to record each of the initial business activities on September 1 2. Prepare the adjusting journal entries, if any, required on September 30

Explanation / Answer

Adjusting entry :

No Date General journal Debit credit 1 Sep 30 Rent expense (7200/6) 1200 Prepaid rent 1200 2 Sep 30 Unearned revenue (45600/12) 3800 Admission revenue 3800 3 Sep 30 Account receivable 1700 Admission revenue 1700 4 Sep 30 Salary and wages expense 2300 Salary and wages payable 2300

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