The Play House Theatre offers 8 shows per year from September until April. The company has one show each month over the 8-month season. September is always very busy as the company gears up for the new season. The following activities occurred at the Play House during the month of September:
a) On September 1, the company sold season tickets for admission to the season's shows. Ticket sales totalled $1,800,000.
b) On September 1, the theatre issued a casting call and hired the actors for the first show beginning in mid-September. Actor wages for September were $22,750 and paid October 15.
c) On September 1, the Theatre Company also prepaid the stage rental for the entire season. The cost was $500,000.
d) The company has an outstanding short term $150,000 loan with First National bank that was negotiated in August and must be repaid in full by December 15. The interest rate on the loan is 5% and the interest must be paid monthly on the 1st.
e) On September 10, theatre playbills were printed for the first half of the entire season. The printing cost was $10,500.
Instructions
For each of the transactions above, 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.
Correct Answer:
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