Problem

Gunflint Adventures operates an airplane service that takes fishing parties to a remote la...

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 accounts only once each month. Selected balances appearing in the company’s June 30 adjusted trial balance appear as follows:

 

Debit

Credit

Prepaid airport rent

$ 7.200

 

Unexpired insurance

Airplane

3,500

240,000

 

Accumulated depreciation: airplane

 

$36,000

Unearned passenger revenue

 

90,000

Other Information

1. The airplane is being depreciated over a 20-year life with no residual value.


2. Unearned passenger revenue represents advance ticket sales for bookings 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 $75,000.

Instructions

a. Determine the following:

1. The age of the airplane in months.

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

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search