PROBLEM $3\mathrm{.}4$A

$101$ The Accounting Cycle:

through

Journalizing, Posting, and Preparing a Trial

L$010$

Balance

In June $2011,$ Wendy Winger organized a corporation to provide aerial photography services. The company, called Aerial Views, began operations immediately. Transactions during the month of June were as follows:

June $1$ The corporation issued $60,000$ shares of capital stock to Wendy Winger in exchange for $$60,000$ cash.

June $2$ Purchased a plane from Utility Aircraft for $$220,000.$ Made a $$40,000$ cash do payment and issued a note payable for the remaining balance.

June $4$ Paid Woodrow Airport $$2,500$ to rent office and hangar space for the month.

June $15$ Billed customers $$8,320$ for aerial photographs taken during the first half of June.

June $15$ Paid $$5,880$ in salaries earned by employees during the first half of June.

June $18$ Paid Hannigan's Hangar $$1,890$ for maintenance and repair services on the company plane.

June $25$ Collected $$4,910$ of the amounts billed to customers on June $15.$

June $30$ Billed customers $$16,450$ for aerial photographs taken during the second half of the month.

June $30$ Paid $$6,000$ in salaries earned by employees during the second half of the month.

June $30$ Received a $$2,510$ bill from Peatree Petroleum for aircraft fuel purchased in June. The entire amount is due July $10.$

June $30$ Declared a $$2,000$ dividend payable on July $15.$

The account titles used by Aerial Views are:

$\backslash$table$[[$Cash$,$Retained Earnings$],[$Accounts Receivable,Dividends$],[$Aircraft$,$Aerial Photography Revenue$],[$Notes Payable,Maintenance Expense$],[$Accounts Payable,Fuel Expense$],[$Dividends Payable,Salaries Expense$],[$Capital Stock,Rent Expense$]]$

Instructions

a$.$ Analyze the effects that each of these transactions will have on the following six components of the company's financial statements for the month of June. Organize your answer in tabular form, using the column headings shown. Use I for increase, D for decrease, and NE for no effect. The June $1$ transaction is provided for you:

$\backslash$table$[[\backslash$table$[[$Transaction$],[$June $1]],$Income Statement,Balance Sheet$],[$Revenue $-$ Expen,t Income,Assets $=$ Liabiliti,rs$\text{'}$ Equity$],[$NE$,$NE$,$NE$,$I$]]$

Chapter $3$ The Accounting Cycle: Capturing Economic Events

b$.$ Prepare journal entries $($including explanations$)$ for each transaction.

c$.$ Post each transaction to the appropriate ledger accounts $($use a running balance format as illustrated in Exhibit $3-4$ on page $95).$

d$.$ Prepare a trial balance dated June $30,2011.$

e$.$ Using figures from the trial balance prepared in part d$,$ compute total assets, total liabilities, and owners' equity. Are these the figures that the company will report in its June $30$ balance sheet? Explain your answer briefly.