Resort Flying Service was organized on June 1 to offer air service for visitors to a famous

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Resort Flying Service was organized on June 1 to offer air service for visitors to a famous island resort. The company follows the policy of adjusting and closing its accounts each month. At December 31, after seven months of operating experience, the trial balance on page 173 was prepared from the ledger. LO8 Other data

(a) Monthly rent amounted to $1,000.

(b) Insurance expense for December was $1,300.

(c) All necessary maintenance work was provided by Cook Air Services at a fixed charge of $2,500 a month. Service for three months had been paid for in advance on December 1.

(d) Spare parts used in connection with maintenance work amounted to $1,250 dur¬

ing the month.

(e) At the time of purchase the remaining useful life of the aircraft, which were several years old, was estimated at 5,000 hours of flying time. During December, total flying time amounted to 160 hours.

(f) The Chamber of Commerce purchased 2,000 special price tickets for $20,000.

Note that the special price per ticket is $10. Each ticket allowed the holder one flight normally priced at $15. During the month 400 of these reduced-price tickets had been used.
(g) Salaries earned by employees but not paid were $1,100 at December 31.

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Instructions a Prepare a 10-column work sheet for the month ended December 31.
b Prepare an income statement, a statement of owner’s equity, and a balance sheet, c Prepare adjusting and closing entries.

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Accounting The Basis For Business Decisions

ISBN: 9780070415515

5th Edition

Authors: Robert F. Meigs, Walter B Meigs

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