Question

The following ledger accounts are used by the Heartland Race Track

Answer 1

Answer:

Heartland Race Track

Journal Entries:

A. November 1:

Debit Prepaid Rent $180,000

Credit Cash Account $180,000

To record the payment of rent for three months.

B. November 1:

Debit Cash Account $1,152,000

Credit Unearned Sales Revenue $1,152,000

To record the sale of year-round season tickets.

C. November 1:

Debit Cash Account $300,000

Credit Notes Payable $300,000

To record the issue of 6% note payable for 3 months.

D. November 5:

Debit Prepaid Advertising $3,600

Credit Cash Account $3,600

To record the printing of programs for three months.

E. Debit Accounts Receivable (Concession) $16,800

Credit Sales Revenue $16,800

To record  concessions fees.

November 30: Adjusting Entries:

A. Debit Rent Expense $60,000

Credit Prepaid Rent $60,000

To adjust for rent expense for the month.

B. Debit Unearned Sales Revenue $96,000

Credit Sales Revenue $96,000

To record the earned revenue for season tickets for the month.

C. Debit Interest Expense $1,500

Credit Interest Payable $1,500

To accrue interest for one month on note payable.

D. Debit Advertising Expense $1,200

Credit Prepaid Advertising $1,200

To record advertising expense for the month.

Explanation:

Heartland Race Track will find the use of the general and adjusting journals helpful in its accounting records.  They provide the needed guidance to ensure that the accounts involved in every business transaction are properly identified and entries are correctly recorded on the correct side of the accounts.  Transactions are recorded following the ubiquitous accounting equation, the accrual concept, and matching principle of generally accepted accounting principles.