Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Transaction Analysis and Trial Balance BC Back-Country Airlines, Inc., operates leased amphibious aircraft and docking facilities, equipping the firm to transport campers and hunters from

Transaction Analysis and Trial Balance

BC Back-Country Airlines, Inc., operates leased amphibious aircraft and docking facilities, equipping the firm to transport campers and hunters from British Columbia, Canada, to outpost camps owned by various resorts. On August 1, the firm's trial balance was as follows:

BC BACK-COUNTRY AIRLINES, INC. Unadjusted Trial Balance August 1, 2016
Debit Credit
Cash $82,800
Accounts Receivable 23,400
Accounts Payable $1,900
Notes Payable 3,200
Common Stock 80,000
Retained Earnings 21,100
Totals $106,200 $106,200

During August, the following transactions occurred:

Aug 1 Paid August rental cost for aircraft, dockage, and dockside office, $6,200.
2 Paid the insurance premium for August, $3,000.
3 Paid for August advertising in various sports magazines, $1,700.
4 Rendered fly-in services for various groups for cash, $16,950.
5 Billed the Canadian Ministry of Natural Resources for services in transporting mapping personnel, $4,100.
6 Received $20,600 on account from clients.
7 Paid $1,900 on accounts payable.
8 Billed various clients for services, $19,600.
9 Paid interest on an outstanding note payable for August, $75.
10 Paid August wages, $15,000.
11 Received invoice for the cost of fuel used during August, $3,800.
12

Paid a cash dividend, $4,700 (debit Retained Earnings).

Required

a. Set up accounts for each item in the August 1 trial balance and enter the beginning balances. Also provide similar accounts for the following items: Service Fees Earned, Wage Expense, Advertising Expense, Rent Expense, Fuel Expense, Insurance Expense and Interest Expense. Create journal entries and record the transactions for August in the appropriate T-accounts, using the dates given.

General Journal

Date

Description

Debit

Credit

1

2

3

4

5

6

7

8

9

10

11

12

Cash

Beg

1

2

3

4

5

6

7

8

9

10

11

12

Bal

Account Receivable

Beg

5

6

8

Bal

Notes Payable

Beg

Bal

Accounts Payable

Beg

7

11

Bal

Common Stock

Beg

Bal

Retained Earnings

Beg

12

Bal

Interest Expenses

9

Bal

Service Fees Earned

4

5

8

Bal

Rent Expenses

1

Bal

Wage Expenses

10

Bal

Insurance Expenses

2

Bal

Advertising Expenses

3

Bal

Fuel Expenses

11

Bal

b. Prepare a trial balance as of August 31, 2016.

BC Back-Country Airlines, INC

Trial Balance

August 31, 2016

Debit

Credit

Cash

Account Receivable

Account Payable

Common Stock

Retained Earnings

Service Fees Earned

Wage Expenses

Rent Expenses

Fuel Expenses

Insurance Expense

Interest Expense

Notes Payable

Advertising Expense

Totals

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting

Authors: Will Seal, Carsten Rohde, Ray Garrison, Eric Noreen

6th Edition

0077185536, 978-0077185534

More Books

Students also viewed these Accounting questions