The Starr Theater Question

The Starr Theater, owned by Meg Vargo, will begin operations in March.
The Starr will be

unique in that it will show only triple features of sequential theme movies. As of March 1, the
ledger of Starr showed: No. 101 Cash $3,000, No. 140 Land $24,000, No. 145 Buildings
(concession stand, projection room, ticket booth, and screen) $10,000, No. 157 Equipment
$10,000, No. 201 Accounts Payable $7,000, and No. 301 Owner’s Capital $40,000. During the
month of March, the following events and transactions occurred.
March
2 Rented the three Indiana Jones movies to be shown for the first 3 weeks of March. The
film rental was $3,500; $1,500 was paid in cash and $2,000 will be paid on March 10.
3 Ordered the Lord of the Rings movies to be shown the last 10 days of March. It will cost
$200 per night.
9 Received $4,300 cash from admissions.
10 Paid balance due on Indiana Jones movies rental and $2,100 on March 1 accounts
payable.
11 Starr Theater contracted with Adam Ladd to operate the concession stand. Ladd is to pay
15% of gross concession receipts, payable monthly, for the rental of the concession stand.
12 Paid advertising expenses $900.
20 Received $5,000 cash from customers for admissions.
20 Received the Lord of the Rings movies and paid the rental fee of $2,000.
31 Paid salaries of $3,100.
31 Received statement from Adam Ladd showing gross receipts from concessions of $6,000
and the balance due to Starr Theater of $900 ($6,000 3 15%) for March. Ladd paid one
half the balance due and will remit the remainder on April 5.
31 Received $9,000 cash from customers for admissions.
In addition to the accounts identifi ed above, the chart of accounts includes: No. 112 Accounts
Receivable, No. 400 Service Revenue, No. 429 Rent Revenue, No. 610 Advertising Expense,
No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.
Instructions
(a) Enter the beginning balances in the ledger. Insert a check mark (✓) in the reference column
of the ledger for the beginning balance.
(b) Journalize the March transactions. Starr records admission revenue as service revenue, rental
of the concession stand as rent revenue, and fi lm rental expense as rent expense.
(c) Post the March journal entries to the ledger. Assume that all entries are posted from page 1 of
the journal.
(d) Prepare a trial balance on March 31, 2017.

Answers :
(a) Enter the beginning balances in the ledger. Insert a check mark (✓) in the reference column
of the ledger for the beginning balance.
(c) Post the March journal entries to the ledger. Assume that all entries are posted from page 1
of the journal.
Cash No. 101

Date Explanation Ref. Debit Credit Balance
March 1 Balance  3,000
2 101 1,500 1,500
9 101 4,300 5,800
10 101 4,100 1,700
12 101 900 800
20 101 5,000 5,800
20 101 2,000 3,800
31 101 3,100 700
31 101 450 1,150
31 101 9,000 10,150 (D)
Account Receivable No. 112

Date Explanation Ref Debit Credit Balance
Mar. 31 112 450 450 (D)
Land No. 140

Mar. 1 Balance  24,000 (D)
Buildings No. 145

Equipments No. 157

Account Payable No. 201

Mar. 1 Balance  7,000
2 201 2,000 9,000
10 201 4,100 4,900 (K)
Owner’s Capital No. 301

Mar. 1 Balance  40,000 (K)
Service Revenue No. 400
Mar. 9 400 4,300 4,300
20 400 5,000 9,300
31 400 9,000 18,300 (D)
Rent Revenue No. 429

Mar. 31 429 900 900 (K)
Advertising Expense No. 610

Mar. 12 610 900 900 (D)
Salaries and Wages Expense No. 726

Mar. 31 726 3,100 3,100 (D)
Rent Expense No. 729

Mar. 2 729 3,500 3,200
20 729 2,000 5,500 (D)
(b) Journalize the March transactions.
Date Account Ref Debit Kredit
March Rent Expense 729 3,500

2 Accounts Payable 201 2,000
Cash 101 1,500
3 No entry
9 Cash 101 4,300

Service Revenue 400 4,300
10 Accounts Payable 201 4,100
Cash 101 4,100
11 No entry.
12 Advertising Expense 610 900

Cash 101 900
20 Cash 101 5,000
20 Rent Expense 729 2,000
Cash 101 2,000
31 Salaries and Wages Expense 726 3,100
Cash 101 3,100
31 Cash 101 450
Accounts Receivable 112 450
Rent Revenue 429 900
(15% x 6,000)
31 Cash 101 9,000
32,800 32,800
(d) Prepare a trial balance on March 31, 2017.
STARR THEATER
Trial Balance
March 31, 2017
Account Debit Credit
Cash 10,150
Accounts Receivable 450
Land 24,000
Buildings 10,000
Equipment 10,000
Accounts Payable 4,900
Owner’s Capital 40,000
Service Revenue 18,300
Rent Revenue 900
Advertising Expense 900
Salaries and Wages Expense 3,100
Rent Expense 5,500
64,100 64,100

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The Starr Theater, owned by Meg Vargo, will begin operations in March.

The Starr will be

9 Received $4,300 cash from admissions.

12 Paid advertising expenses $900.

20 Received $5,000 cash from customers for admissions.

31 Paid salaries of $3,100.

31 Received $9,000 cash from customers for admissions.

(d) Prepare a trial balance on March 31, 2017.

Cash No. 101

Account Receivable No. 112

Land No. 140

Buildings No. 145

Equipments No. 157

Account Payable No. 201

Owner’s Capital No. 301

Rent Revenue No. 429

Advertising Expense No. 610

Salaries and Wages Expense No. 726

Rent Expense No. 729

(b) Journalize the March transactions.

Date Account Ref Debit Kredit

March Rent Expense 729 3,500

9 Cash 101 4,300

12 Advertising Expense 610 900

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