The RNW Company owns and operates an amusement park. The following are selected accounts from the RNW Company s trial balance as of December 31:
Debit Credit
Equipment $1,068,100
Accumulated Depreciation Equipment $333,800
Notes Payables 500,700
Admissions Revenue 2,113,900
Advertising Expense 76,100
Salaries Expense 320,400
Interest Expense 7,800
The following information is also available:
1. The equipment is depreciated using the straight-line method over its estimated life of 16 years. The equipment has an estimated salvage value of $222,500
2. The note payable carries a 10% interest rate. It was given to the First National Bank on October 17 and is due to be repaid in 240 days after that date. (Note: Assume a 365 day year in any computations.)
3. During the Christmas holiday season, RNW Company ran a promotion for park admission tickets valid during the next year. In total, they sold 2,600 tickets at a price of $33 each. The sales amount was credited to Admissions Revenue.
4. Included in the Advertising Expense account balance is a $6,120 prepayment of advertising that will be aired on local radio stations during the first quarter of the next year.
5. As of December 31, there was $26,150 in salaries that had been earned but not recorded.
6. RNW Company ends its accounting year on December 31.
Instructions:
1. Prepare the annual adjusting journal entries necessary as of December 31.
2. Compute the amount of the following account balances that should be shown on the income statement for the year:
a. Interest Expense
b. Admissions Revenue
c. Advertising Expense
d. Salaries Expense