Reference no: EM132652241
Questions -
Q1. Account balances for Crystal Auto Wash at September 30, 2019 are shown below. The figure for retained earnings is not given, but it can be determined when all the available information is assembled in the form of balance sheet.
Account payable S14,000 Land $68,000
Account receivable 8,00 Machinery & equipment 65,000
Building 52,000 Note payable (due in 30 days) 29,000
Cash 9,200 Salaries payable 3,000
Capital stock 100,000 Supplies 4,00
Retained earnings ?
Instructions:
a. What will be the balance sheet at September 30, 2019
b. Does this balance sheet indicate that the company is in a strong financial position?
c. How would an income statement and a statement of cash flow allow you to better respond to part b?
Q2. Gunflint Adventures operates an airplane service that takes fishing parties to a remote lake resort in northern Manitoba, Canada. Individuals must purchase their tickets at least one month in advance during the busy summer season. The company adjusts its account only once each month. Selected balances appearing in the company's June 30 adjusted trial balance appear as follows:
Debit Credit
Prepaid airport rent $ 7200
Unexpired insurance 3500
Airplane 240,000
Accumulated depreciation: airplane $ 36000
Unearned passenger revenue 90,000
Other information:
1. The airplane is depreciated over a 20-year life with no residual value.
2. Unearned passenger revenue represents advance ticket sales for booking in July and August at $300 per ticket.
3. Six months' airport rent had been prepaid on May 1.
4. The unexpired insurance is what remains of a 12 month policy purchased on February 1.
5. Passenger revenue earned in June totaled $75000.
Instructions -
a. Determine the following:
1. The age of the airplane in month
2. The monthly airport rent expense
3. The amount paid for the 12-month insurance policy on February 1.
b. Prepare the adjusting entries made on June 30 involving the following accounts:
1. Depreciation expense: airplane
2. Airport rent expense
3. Insurance expense
4. Passenger revenue earned
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