Question

Prepare the journal entry, if any, required to record each of the initial business activities on September 1. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

a. On September 1, paid rent on the track facility for six months at a total cost of $12,000.
b. On September 1, received $55,200 for season tickets for 12-month admission to the race track.
c. On September 1, booked the race track for a private organization that will use the track one day per month for $1,900 each time, to be paid in the following month. The organization uses the track on September 30.
d. On September 1, hired a new manager at a monthly salary of $3,100, to be paid the first Monday following the end of the month.

Answer 1

The journal entries are as follows:

(a) On September 1,

Prepaid rent A/c Dr. $12,000

To cash A/c $12,000

(To record the prepaid rent)

On September 30,

Rent expense A/c ($12,000 ÷ 6) Dr. $2,000

To Prepaid rent A/c $2,000

(To record the rent expense)

(b) On September 1,

Cash A/c Dr. $55,200

To unearned revenue $55,200

(To record the unearned revenue)

On September 30,

Unearned revenue A/c ($55,200 ÷ 12) Dr. $4,600

To ticket revenue $4,600

(To record the ticket revenue)

(c) On September 1,

No entry required.

On September 30,

Account receivable A/c Dr. $1,900

To Rent revenue $1,900

(To record the accounts receivable)

(d) On September 1 - No journal entry required

On September 30,

Salary expense A/c Dr. $3,100

To salaries payable $3,100

(To record the salaries expense)