Answer:
Texas Go-Kart Company
1. Journal Entry on September 1:
Debit Prepaid Rent $7,800
Credit Cash Account $7,800
To record the prepayment of rent expenses for six months.
Debit Cash $46,800
Credit Deferred Service Revenue from Tickets $46,800
To record the receipt of cash for season tickets for 12 months.
September 30:
Debit Accounts Receivable $1,900
Credit Service Revenue $1,900
To record the provision of track services.
September 30:
Debit Salaries Expense $2,400
Credit Salaries Payable $2,400
To record the expense for the month.
Debit Rent Expense $5,200
Credit Prepaid Rent $5,200
To record the rent expense for 4 months.
Debit Deferred Service Revenue from Tickets $15,600
Credit Service Revenue from Tickets $15,600
To record the earned revenue from tickets for 4 months.
Explanation:
Journal entries have proved to be useful in record business transactions as they occur on a daily basis. They show the accounts involved in each transaction and the ones to be debited and credited as the case may be. Journal entries are also used to adjust entries at the end of the period. These adjustments help to bring the accounting records to align with the accrual basis of accounting, ensuring that the matching principle is observed.
