Accounting I

Chapter III

Recap: Exercise
Study Objectives 5, 6

The following ledger accounts are used by the Ottawa Greyhound Park:
Accounts Receivable
Prepaid Rent
Office Supplies (Schedules)
Cash

Unearned Admissions Revenue

Accounts Payable
Notes Payable
Interest Payable

Printing Expense
Rent Expense
Interest Expense

Admissions Revenue
Concessions Revenue

Instructions
For each of the following transactions below, prepare the journal entry (if one is required) to record the initial transaction and then prepare the adjusting entry, if any, required on
September 30, the end of the fiscal year.
(a) On September 1, paid rent on the track facility for three months, $180,000.
(b) On September 1, sold season tickets for admission to the racetrack. The racing season is year-round with 25 racing days each month. Season ticket sales totaled $840,000.
(c) On September 1, borrowed $300,000 from First National Bank by issuing a 9% note payable due in three months.
(d) On September 5, schedules for 20 racing days in September, 25 racing days in October, and 15 racing days in November were printed for $2,400.
(e) The accountant for the concessions company reported that gross receipts for September were $140,000. Ten percent is due to Ottawa and will be remitted by October 10.

1
 Accounting I
Chapter III

Recap: Exercise
Study Objectives 5, 6

Instruction – continued
The solution should follow the following format
Journal Entry
Prepaid Insurance 1,000
Cash 1,000
Adjusting Entry
Insurance Expense 60
Prepaid Insurance 60

2
 Accounting I
Chapter III

Recap: Exercise
Study Objectives 5, 6

For each of the following transactions below, prepare the journal entry (if one is
required) to record the initial transaction and then prepare the adjusting entry,
if any, required on September 30, the end of the fiscal year.
(a) On September 1, paid rent on the track facility for three months, $180,000.

Solution
(a) Journal Entry
Prepaid Rent 180,000
Cash 180,000
Adjusting Entry
Rent Expense 60,000
Prepaid Rent 60,000

3
 Accounting I
Chapter III

Recap: Exercise
Study Objectives 5, 6

For each of the following transactions below, prepare the journal entry (if one is required) to
record the initial transaction and then prepare the adjusting entry, if any, required on
September 30, the end of the fiscal year.
(b) On September 1, sold season tickets for admission to the racetrack. The racing season
is year-round with 25 racing days each month. Season ticket sales totaled $840,000.

Solution

(b) Journal Entry

Cash 840,000
Unearned Admissions Revenue 840,000
Adjusting Entry
Unearned Admissions Revenue 70,000
Admissions Revenue 70,000
($840,000 ÷ 12 = $70,000)

4
 Accounting I
Chapter III

Recap: Exercise
Study Objectives 5, 6

For each of the following transactions below, prepare the journal entry (if one is required) to
record the initial transaction and then prepare the adjusting entry, if any, required on
September 30, the end of the fiscal year.
(c) On September 1, borrowed $300,000 from First National Bank by issuing a 9% note
payable due in three months.

Solution

(c) Journal Entry

Cash 300,000
Note Payable 300,000
Adjusting Entry
Interest Expense 2,250
Interest Payable 2,250
($300,000 × .09 × 1 ÷ 12 = $2,250)

5
 Accounting I
Chapter III

Recap: Exercise
Study Objectives 5, 6

For each of the following transactions below, prepare the journal entry (if one is
required) to record the initial transaction and then prepare the adjusting entry,
if any, required on September 30, the end of the fiscal year.
(d) On September 5, schedules for 20 racing days in September, 25 racing days
in October, and 15 racing days in November were printed for $2,400.

Solution
(d) Journal Entry
Office Supplies (Schedules) 2,400
A/P 2,400
Adjusting Entry
Printing Expense 800
Office Supplies (Schedules) 800
($2,400 × 20 ÷ 60 = $800)

6
 Accounting I
Chapter III

Recap: Exercise
Study Objectives 5, 6

For each of the following transactions below, prepare the journal entry (if one is
required) to record the initial transaction and then prepare the adjusting entry,
if any, required on September 30, the end of the fiscal year.
(e) The accountant for the concessions company reported that gross receipts for
September were $140,000. Ten percent is due to Ottawa and will be remitted
by October 10.

Solution
(e) Journal Entry
None
Adjusting Entry
Accounts Receivable 14,000
Concessions Revenue 14,000