Which of the following revisions of sentence 4 (reprinted here) is the clearest and most grammatically correct?

The first movie theater opened in 1902 in Los Angeles and it charged five cents so they called it a nickelodeon.

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The correct answer to this question is
The first movie theater in Los Angeles that opened in 1902  and charged five cents is called a nickelodeon.

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The revision of sentence 4 (reprinted here) is the clearest and most grammatically correct is The first movie theater in Los Angeles that opened in 1902  and charged five cents is called a nickelodeon.

Answer:

Wait, what I don't understand this at alll. LOL!!

Explanation: