Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

Exercise 41

Relationship of Adjusting Entries to Business Transactions
Among the ledger accounts used by Rapid Speedway are the following: Prepaid Rent, Rent Expense, Unearned Admissions Revenue, Admissions Revenue, Prepaid Printing, Printing Expense, Concessions Receivable, and Concessions Revenue. For each of the following items, provide the journal entry (if one is needed) to record the initial transaction and provide the adjusting entry, if any, required on May 31, assuming the company makes adjusting entries monthly.
a. On May 1, borrowed $500,000 cash from National Bank by issuing a 9 percent note payable due in three months.
b. On May 1, paid rent for six months beginning May 1 at $12,000 per month.
c. On May 2, sold season tickets for a total of $600,000 cash. The season includes 60 racing days: 15 in May, 20 in June, and 25 in July.
d. On May 4, an agreement was reached with Snack-Bars, Inc., allowing that company to sell refreshments at the track in return for 10 percent of the gross receipts from refreshment sales.