River Rat. Inc.. operates a ferry that takes travelers across the Wild River. The company adjusts its
accounts at the end of each month. Selected account balances appearing in the April 30 adjusted trial balance are as follows:
| Debit | Credit |
Prepaid rent | $12,000 |
|
Unexpired insurance | 2,400 |
|
Ferry | 96,000 |
|
Accumulated depreciation: ferry |
| $20,000 |
Unearned passenger revenue |
| 1,040 |
Other Data
1. The ferry is being depreciated over an eight-year estimated useful life.
2. The unearned passenger revenue represents tickets good for future rides sold to a resort hotel for $2 per ticket on April 1. During April. 160 of the tickets were used.
3. Five months’ rent had been prepaid on April 1.
4. The unexpired insurance is a 12-month fire insurance policy purchased on March 1.
Instructions
a. Determine the following:
1. The.age of the ferry in months.
2. How many $2 tickets for future rides were sold to the resort hotel on April 1.
3. The monthly rent expense.
4. The original cost of the 12-month fire insurance policy.
b. Prepare the adjusting entries that were made on April 30.
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