The Super Hero Theme Park was started on January 1 of the current year by Dr. Strange. The following selected events and transactions occurred during January:
1-Jan
Jack Strange, the owner, invested $50,000 in the business.
5-Jan
Purchased equipment for $100,000 on account from The Gotham Company.
8-Jan
Incurred advertising expense of $1,800 on account from Mr. Freeze Agency.
11-Jan
Paid salaries to employees, $1,500
12-Jan
Paid the cell phone bill, $200.
13-Jan
Paid $1,500 for a 1-year insurance policy.
17-Jan
Jack Strange withdrew $600 cash for personal use.
20-Jan
Received $5,700 in cash for admission fees.
22-Jan
Billed corporate customers $3,000 for using the park earlier today.
25-Jan
Collected $2,500 from customers in advance of using the park.
30-Jan
Paid $700 on account for the advertising incurred back on January 8.
The following accounts are used in the Super Hero Theme Park:
- Cash, Accounts Receivable
- Prepaid Insurance
- Equipment
- Accounts Payable
- Unearned Admission Revenue
- Jack Strange, Capital
- Jack Strange, Drawing
- Admission Revenue
- Advertising Expense
- Salaries Expense
- Telephone Expense
Complete the following:
- Journalize the January transactions.
- Post transactions to the General Ledger.
- Prepare a Trial Balance.
- Prepare an Income Statement.
- Prepare a Statement of Owner’s Equity.
- Prepare a Balance Sheet.
Expert Solution Preview
Introduction:
The Super Hero Theme Park was started by Dr. Strange on January 1 of the current year. This assignment requires us to journalize the transactions that occurred during January, post them to the general ledger, prepare a trial balance, income statement, statement of owner’s equity, and balance sheet.
1. Journalize the January transactions:
Jan 1: Cash $50,000, Jack Strange, Capital $50,000
Jan 5: Equipment $100,000, Accounts Payable $100,000
Jan 8: Advertising Expense $1,800, Accounts Payable $1,800
Jan 11: Salaries Expense $1,500, Cash $1,500
Jan 12: Telephone Expense $200, Cash $200
Jan 13: Prepaid Insurance $1,500, Cash $1,500
Jan 17: Jack Strange, Drawing $600, Cash $600
Jan 20: Cash $5,700, Admission Revenue $5,700
Jan 22: Accounts Receivable $3,000, Unearned Admission Revenue $3,000
Jan 25: Cash $2,500, Unearned Admission Revenue $2,500
Jan 30: Advertising Expense $700, Accounts Payable $700
2. Post transactions to the General Ledger:
| Account Name | Debit | Credit |
|———————-|————–|—————|
| Cash | 65,800 | |
| Accounts Receivable | | 3,000 |
| Prepaid Insurance | 1,500 | |
| Equipment | | 100,000 |
| Accounts Payable | 100,000 | 700 |
| Unearned Admission Revenue| 5,000 | 2,500 |
| Jack Strange, Capital | 50,000 | |
| Jack Strange, Drawing| 600 | |
| Admission Revenue | | 5,700 |
| Advertising Expense | 2,500 | |
| Salaries Expense | 1,500 | |
| Telephone Expense | 200 | |
3. Prepare a Trial Balance:
| Account Name | Debit | Credit |
|———————-|————–|—————|
| Cash | 65,800 | |
| Accounts Receivable | | 3,000 |
| Prepaid Insurance | 1,500 | |
| Equipment | | 100,000 |
| Accounts Payable | 100,000 | 700 |
| Unearned Admission Revenue| 5,000 | 2,500 |
| Jack Strange, Capital | 50,000 | |
| Jack Strange, Drawing| 600 | |
| Admission Revenue | | 5,700 |
| Advertising Expense | 2,500 | |
| Salaries Expense | 1,500 | |
| Telephone Expense | 200 | |
| Total | 126,100 | 111,900 |
4. Prepare an Income Statement:
| Account Name | Amount |
|———————-|————–|
| Admission Revenue | 5,700 |
| Total Revenue | 5,700 |
| Advertising Expense | 2,500 |
| Salaries Expense | 1,500 |
| Telephone Expense | 200 |
| Total Expenses | 4,200 |
| Net Income | 1,500 |
5. Prepare a Statement of Owner’s Equity:
| Account Name | Amount |
|———————-|————–|
| Jack Strange, Capital | 50,000 |
| Net Income | 1,500 |
| Jack Strange, Drawing| 600 |
| Total | 48,900 |
6. Prepare a Balance Sheet:
| Account Name | Amount |
|———————-|————–|
| Cash | 65,800 |
| Accounts Receivable | 3,000 |
| Prepaid Insurance | 1,500 |
| Equipment | 100,000 |
| Total Assets | 170,300 |
| Accounts Payable | 100,700 |
| Unearned Admission Revenue| 2,500 |
| Jack Strange, Capital | 50,000 |
| Total Liabilities and Equity| 170,300|