Question

a. Borrowed $670,000 from the bank on December 1, signing a note payable, due in six months. b. Purchased a new snowplow for $24,250 cash on December 31. c. Purchased ski supplies for $17,100 on account. d. Incurred $27,200 in routine maintenance expenses for the chairlifts; paid cash. e. Received $71,250 for season passes (beginning in the new year). f. Daily lift passes were sold this month for a total of $93,000 cash. g. Received a $505 deposit on a townhouse to be rented for five days in January. h. Paid half the charges incurred on account in (c). i. Incurred and paid $18,200 in wages to employees for the month of December. Required: 1. Prepare accrual basis journal entries for each transaction. 2. Calculate the company's net income based on the transactions listed. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the company's net income based on the transactions in Requirement 1. Net Income < Required 1 Required 2

Answer 1

Solution:
1	Journal Entries
Date	Account titles & explanations	Debit	Credit
a.	Cash	$670,000
	Notes Payable		$670,000
	(For Notes Payable recorded)
b.	Equipment	$24,250
	Cash		$24,250
	(For Purchase of Snowplow)
c.	Supplies	$17,100
	Accounts Payable		$17,100
	(For Purchase of supplies on account)
d.	Repairs and Maintainance Expense	$27,200
	Cash		$27,200
	(For repairs and maintainance expense )
e.	Cash	$71,250
	Unearned Revenue		$71,250
	(For advance received against revenue)
f.	Cash	$93,000
	Service Revenue		$93,000
	(For Cash received against sale revenue)
g.	Cash	$505
	Unearned Revenue		$505
	(For advance received against revenue)
h.	Accounts Payable	$8,550
	Cash		$8,550
	(For cash paid for supplies)
i	Salaries and Wages Expense	$18,200
	Cash		$18,200
	(For Salaries and Wages paid in cash)
2	Net Income = Revenues - Expenses
	$93,000 - ($27,200 + $18,200)
	$47,600
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