Question

Pikes Peak is a ski resort in upstate New York. The company sells lift tickets, ski lessons, and ski equipment. It operates several restaurants and rents townhouses to vacationing skiers. The following hypothetical December transactions are typical of those that occur at the resort. a Borrowed $740,000 from the bank on December 1, signing a note payable, due in six months. b. Purchased a new snowplow for $26,250 cash on December 31, c. Purchased ski supplies for $14.900 on account d. Incurred $26.400 in routine maintenance expenses for the chairlifts: paid cash e Received $81.250 for season passes (beginning in the new year). f Daily lift passes were sold this month for a total of $91,000 cash g. Received a $485 deposit on a townhouse to be rented for five days in January h. Paid half the charges incurred on account in (c). Lincurred and paid $22.200 in wages to employees for the month of December Required: 1. Prepare accrual basis journal entries for each transaction 2. Calculate the company's preliminary net income Complete this question by entering your answers in the tabs below < Prev 11 of 23 III Next >

Answer 1

Credits Journal entries :- S.No Date Accounts Title & Explanation Debit $ a 01-Dec Cash 740,000 To Notes Payable (Entry for boorowing from bank by signing notes payable) 740,000 b 26,250 01-Dec Snowplow Equipment To Cash (Entry for purchase of new snowplow) 26,250 C 14,900 01-Dec Ski supplies To Accounts Payable (Entry for purchase of ski supplies on account) 14,900 d 26,400 01-Dec Repairs & Maintenance Expense To Cash (Entry for repairs & maintenance expenses paid in cash) 26,400 e 81,250 01-Dec Cash To Unearned Revenue (Entry for cash received in advance for season passes) 81,250 f 91,000 01-Dec Cash To Sales Revenue (Entry for cash received for sale of season passes) 91,000 g 485 01-Dec Cash To Security deposit (Entry for security deposit receipt) 485 h 7,450 01-Dec Accounts Payable To Cash (Entry for payment of half of supplies purchase due) 7,450 22,200 01-Dec Wages expense To Cash (Entry for payment of wages to employees) 22,200 2) Net Income = Revenues - Expenses. Total Revenue is = 5 91,000/. Total Expenses is = (26400+22200) - $ 48,600/. Net Income is = (91000-48600) Net Income is = $ 42,400/.