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

Question

Splashtown, Ltd, an amusement park, generates revenue from ticket sales and from renting booths to food and souvenir vendors. It has a calendar financial year but prepares adjusting entries, closing entries, and financial statements quarterly. At the end of the year, the company also prepares annual financial statements. You may assume no errors were made journalising and posting transactions. The unadjusted trial balance at June 30, 2017, the end of the second quarter, follows: Cash Accounts Receivable Prepaid Rent Supplies Equipment Accumulated Depreciation, Equipment Accounts Payable Interest Payable Wages Payable Customer Prepayments Bank Loan Payable Share Capital Retained Earnings Admissions Revenue Vendor Rental Revenue Other Operating Expenses Interest Expense Depreciation Expense Wages Expense $14,400 1,000 9,900 1,200 48,000 $12,000 1,200 150 10,000 28,000 9,630 37,920 6,200 11,600 19,000 $105,10 $105,.100

Explanation / Answer

1. Adjusted Journal Entries No. Particulars Debit ($) Credit ($) 1 Other opearting expense 3300 Prapaid Rent 3300 ($ 9900/9 months)*3 months 2 Supplies 1000 Other opearting expense 1000 3 Depreciation expense 1500 Accumated Depreciation 1500 ($ 6000/12)*3 months 4 Admission revenue 5200 Customer Prepayments 5200 5 Wages Expense 1440 Wages Payable 1440 ($ 1800/5 days)*4 days 6 Account Receivable 2800 Vendor Rental Revenue 2800 (10% of $ 28,000) 7 Interest Expense 150 Interest Payable 150 ($ 10,000*6*(3/12 months) 2 Interest is requoired to be paid semi-anually on January 1 and July 1. Splashtown ltd, passes closing and adjusting entries quarterly. So, Company had booked interest for quarter 1 amounting to $ 150 but not paid because it would be paid on July 1. And company had not booked interest for quarter 2. So, interest payable is outstanding $ 150 on unadjusted trail balance on June 30, 2017. Secondly, Company has not booked intetest expense for quarter 2 as per unadjusted trail balance. So, interest expense is nil on unadjusted trail balance. 3 Statement of Comprehensive Income for quarter ending June 30, 2017    ($) ($) Revenues Admissions Revenue (37920- 5200) 32,720 Vendor Rental Revenue (6200 + 2800) 9,000 Total Revenues 41,720 Expenses Other Opearting Expense (11600+3300-1000) 13,900 Interest Expense 150 Depreciation expense 1,500 Wages Expense (19000+1440) 20,440 Total Expenses 35,990 Net Income 5,730 Asset Section of Balance Sheet as on June 30, 2017 Assets ($) Cash 14400 Account Receivable (1000+2800) 3,800 Prepaid Rent (9900-3300) 6,600 Supplies (1200+1000) 2,200 Equipment 48,000 Total Assets 75,000 Liabilities ($) Accumated Depreciation (12000+1500) 13,500 Accounts payable 1,200 Interest Payable (150+150) 300 Wages payable 1,440 Customer Prepayments 5,200 Bank Loan Payable 10,000 Share Capital 28,000 Retained earnings (9630+5730) 15,360 Total Liabilities 75,000

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