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Dec. 31 250
Accumulated De
p
reciation: Office E
q
ui
p
. 250
31 2
,
500
A
g
enc
y
Fees Earne
d
2
,
500
Office Su
pp
lies 370
31 125
Unex
p
ired Insurance Policies 125
31 45
Interest Pa
y
able 45
31 700
Income Taxes Pa
y
abl
e
700
TOUCHTONE TALENT AGENC
Y
De
p
reciation Ex
p
ense: Office E
q
ui
p
ment
General Journal
(1)
(
2
)
(
7
)
To record
p
ortion of insurance
p
olicies ex
p
ired in
To record office su
pp
lies used in December.
PROBLEM 5.6B
TOUCHTONE TALENT AGENC
Y
70 Minutes, Strong
To convert unearned revenue to earned revenue
December 31, 201
5
To record depreciation of office equipment in December.
Unearned A
g
enc
y
Fee
s
(
9
)
Income Taxes Ex
p
ense
To record income taxes expense accrued in December.
Insurance Ex
p
ense
To record interest ex
p
ense accrued in December.
December.
Interest Ex
p
ense
(
8
)
a.
1.
9.
The company’s adjusted trial balance dated December 31, 2015, appears on the following page.
$3,900 total expense - $3,200 (per trial balance) = $700 accrued in December.
PROBLEM 5.6B
TOUCHTONE TALENT AGENCY (continued
)
(continued)
Computations for each of the adjusting journal entries:
$15,000 (office equipment per trial balance)/60 months = $250 per month.
14
,
950$ 38
,
300 600 250 530
15
,
000 12
,
250$ 1
,
500 6
,
000 3
,
900 5
,
500 1
,
360 45
Accumulated de
p
reciation: office e
q
ui
p
ment
Accounts
p
a
y
abl
e
Income taxes
p
a
y
able
Notes
p
a
y
able
(
Due 3/1/16
)
Unearned a
g
enc
y
fees
Salaries
p
a
y
able
PROBLEM 5.6B
TOUCHTONE TALENT AGENCY (continued
)
Unex
p
ired insurance
p
olicies
Office su
pp
lies
TOUCHTONE TALENT AGENC
Y
December 31, 201
5
Adjusted Trial Balanc
e
Fees receivabl
e
a. (cont'd.)
Office e
q
ui
p
ment
Interest
p
a
y
able
Cash
Pre
p
aid rent
b.
52
,
000$
480$
1
,
500 3
10,800$
Retained earnings (1/1/15)
TOUCHTONE TALENT AGENCY
For the Year Ended December 31, 2015
Statement of Retained Earnings
Ex
p
enses:
Office su
pp
l
y
ex
p
ense
PROBLEM 5.6B
TOUCHTONE TALENT AGENCY (continued
)
Revenues:
TOUCHTONE TALENT AGENC
Y
For the Year Ended December 31, 201
5
A
g
enc
y
fees earne
d
Income Statement
Tele
p
hone ex
p
ense
b. (cont'd.)
Asset
s
14
,
950$ 38
,
300 600 250 530
,
360 45
18
,
305$
20
,
000$ 19
,
075 39
,
075$
57
,
380$
PROBLEM 5.6B
TOUCHTONE TALENT AGENC
Y
TOUCHTONE TALENT AGENCY (continued
)
Fees receivabl
e
Pre
p
aid rent
Balance Shee
t
Cash
December 31, 201
5
Salaries
p
a
y
able
Total liabilities and stockholders' e
q
uit
y
Interest
p
a
y
able
Ca
p
ital stock
Retained earnin
g
s
Stockholders' E
q
uit
y
Total liabilities
Total stockholders' e
q
uit
y
c.
Dec. 31 52
,
000
Income Summar
y
52
,
000
31 42
,
925
Tele
p
hone Ex
p
ense 480
Office Su
pp
l
y
Ex
p
ense 1
,
500
31 800
Dividends 800
Income Summar
y
Retained Earnin
g
s
$9,075
)
.
To close dividends declared in 2015 to Retained
(
4
)
A
g
enc
y
Fees Earne
d
To close A
g
enc
y
Fees Earned.
(
2
)
PROBLEM 5.6B
TOUCHTONE TALENT AGENC
Y
December 31, 201
5
(1)
General Journal
TOUCHTONE TALENT AGENCY (continued
)
d.
14
,
950$ 38
,
300 600 250 530
15
,
000 12
,
250$ 1
,
500 6
Fees receivabl
e
PROBLEM 5.6B
TOUCHTONE TALENT AGENCY (continued
)
Unex
p
ired insurance
p
olicies
Office su
pp
lies
TOUCHTONE TALENT AGENC
Y
December 31, 201
5
After-Closing Trial Balanc
e
Cash
Pre
p
aid rent
Office e
q
ui
p
ment
Accumulated de
p
reciation: office e
q
ui
p
ment
Accounts
p
a
y
abl
e
f.
6
,
700$ 1
,
200
(
at $600/mo.
)
PROBLEM 5.6B
TOUCHTONE TALENT AGENCY (concluded
)
Rent ex
p
ense incurred in 2015
Less: Total rent expense for November and December
50 Minutes, Strong
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance sheet accounts:
Cash
20
,
000
20
,
000
20
,
000
Prepaid film rental
31
,
200
(1)
15
,
200
16
,
000
16
,
000
Land
120
,
000
120
,
000
120
,
000
Building
168
,
000
168
,
000
168
,
000
Accum. Depreciation: building
14
,
000
(2)
700
14
,
700
14
,
700
Fixtures and equipment
36
,
000
36
,
000
36
,
000
Accumulated depreciation:
fixtures & equipment
12
,
000
(3)
600
12
,
600
12
,
600
Notes payable
180
,
000
180
,
000
180
,
000
Accounts payable
4
,
400
4
,
400
4
,
400
Unearned admission revenue
(YMCA)
1
,
000
(5)
500
500
500
Income taxes payable
4
,
740
(8)
4
,
200
8
,
940
8
,
940
Totals 322,300 322,300 377,250 377,250
*Adjustments:
(1) Film rental expense for August. (6) Revenue from concessions for August.
(2) Depreciation expense for August ($168,000 ÷ 240 =$700). (7) Salaries owed to employees but not yet paid.
(3) Depreciation expense for August ($36,000 ÷ 60 =$600). (8) Accrued income taxes on August income.
(4) Accrued interest on notes payable.
(5) Advance payment from YMCA earned during August ($1,500 x 1/3 = $500 per month).
CAMPUS THEATER
Income Statement Balance Shee
t
PROBLEM 5.7B
CAMPUS THEATE
R
Trial Balance
A
djustments
*
A
djusted Trial Balanc
e
WORKSHEET
For the Month Ended August 31, 201
5
15 Minutes, Medium
5.7%
$1.8 billion
PROBLEM 5.8B
THE GAP, INC.
a. $833 million ÷ $14.5 billion =
Net income percentage: Net Income/Total Revenue
Beginning of year: $3.9 billion - $2.1 billion
Working capital: Current Assets – Current Liabilitiesb.
