WestJet includes among its current liabilities $73,020,000 for “Non-refundable guest credits.” Note 1

(e) provides some additional information about this account.

a. What journal entry would WestJet record when a traveller makes the initial reservation?

Remember that when a traveller pays for a ticket in advance of a flight the amount is credited to Advance Ticket Sales (see Note 1(d)). (Alternative approach: In each of parts

(a) to (d), use an accounting equation spreadsheet to record the entry that would be made to record the transaction or economic event that is described.)

b. What adjusting entry is required if a traveller cancels his or her flight but WestJet grants the traveller a “guest credit”?

c. What journal entry would WestJet make if a traveller who has a travel credit calls to book another flight?

d. What journal entry would WestJet make if a traveller who has a guest credit allows it to expire without using it?

WestJet Airlines Ltd. (WestJet) was founded in 1996 by a team of Calgary entrepreneurs, headed by Clive Beddoe, as a Western Canadian regional carrier with three aircraft flying to five cities. Today, WestJet is Canada’s leading high-value low-fare airline, offering scheduled service to 66 destinations in Canada, the United States, Mexico, and the Caribbean, with its fleet of 81 Boeing Next-
Generation 737-series aircraft. WestJet is traded on the TSX under the symbols WJA and WJA.A.
WestJet’s consolidated balance sheets, statements of earnings and comprehensive income, and retained earnings along with some extracts from the notes to the financial statements, are provided in Exhibit 3-1.