Question

For each of the following independent situations, prepare journal entries to record the initial transaction on September 30 and the adjustment required on October 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

a. Hockey Helpers paid $5,200 cash on September 30 to rent an arena for the months of October and November.

b. Super Stage Shows received $17,200 on September 30 for season tickets that admit patrons to a theatre event that will be held twice (on October 31 and November 30).

c. Risky Ventures paid $3,900 on September 30 for insurance coverage for the months of October, November, and December.

Journal Entries:
A) Sept. 30, Record the payment of $5,200 cash on September 30 to rent an arena for the months of October and November.
B) Oct. 31, Record the October 31 adjusting entry for the September 30 cash payment of $5,200 to rent the arena for the months of October and November.
C) Sept. 30, Record the October 31 adjusting entry for the September 30 cash payment of $5,200 to rent the arena for the months of October and November.
D) Oct. 31, Record the October 31 adjusting entry for the September 30 cash payment of $5,200 to rent the arena for the months of October and November.
E) Sept. 30, Record the payment by Risky Ventures of $3,900 on September 30 for insurance coverage for the months of October, November, and December.
F) Oct 31, Record the October 31 adjusting entry for the September 30 cash payment of $3,900 for insurance coverage for the months of October, November, and December.

Answer 1

Dr. Cr.

On September 30

a. Prepaid Rent $5,200

Cash $5,200

b. Cash $17,200

Unearned Revenue $17,200

c. Prepaid Insurance $3,900

Cash $3,900

On October 31

a. Rent Expense $2,600

Prepaid Rent $2,600

b. Unearned Revenue $8,600

Revenue $8,600

a. Rent Expense $1,300

Prepaid Rent $1,300

Step-by-step explanation:

a. Rent paid in advance on September 30 for next 2 months and one mont rent is accrued on October 31.

Accrued Rent = $5,200 / 2 = $2,600

b. Cash received against unearned revenue for next two event. One event has been performed on October 30.

Revenue recognized = $8,600

c. Insurance paid in advance on September 30 for next 3 months and one month Insurance is accrued on October 31.

Accrued Insurance = $3,900 / 3 = $1,300