Reference no: EM132631300
O'Connell's Air Service operates several small airplanes providing passenger and freight service to small towns. Oil fields fishing lodges and other remote locations in Alaska. The company adjusts and closes its accounts at the end of each month. At April 30, the following trial balance was prepared from the ledger.
O'CONNELL'S AIR SERVICE
| Trial Balance April 30,19 |
| Cash |
$22,950 |
| Accounts receivable |
25,800 |
| Prepaid rent |
8,100 |
| Unexpired Insurance |
37,900 |
| Airplanes |
845,000 |
| Accumulated depreciation: Airplane |
$231,780 |
| Notes payable |
423,040 |
| Unearned passenger revenue |
181,680 |
| Maggle O'Connell, Capital |
171,850 |
| Maggle O'Connell, Drawing |
7,750 |
| Freight revenue |
54,250 |
| Fuel expense |
45,600 |
| Salaries expense |
60,800 |
| Maintenance expense |
8,700 |
|
$1,062,600 |
Other Data:
a. One of O'Connell's regular customers is Yukon Oil Company. The airline keeps track of the number of trips carrying freight for the oil company and sends a bill shortly after month end. No entry has yet been made in the airline's accounting records to record $11,750 freight revenue earned in April form Yukon Oil Company.
b. Three months' rent $8,100 had been prepaid on April 1.
c. On January 1, a 12-month insurance policy had been purchased for $49,200.
d. O'Connell's depreciates its airplanes over a period of 15 years (180 months).
e. Accrued interest on notes payable amounts to $4,500 at April 30 and has not yet been recorded.
f. The amount shown as unearned passenger revenue represents the price of tickets sold to customers
In advance of flights. During April, $94,750 of this amount was earned by the airline.
g. Salaries earned by airline employees but not yet recorded or paid amount to $1,625 at April 30.
Required:
Problem 1: Prepare a 10-column work sheet using the trial balance and adjusting data provided. Include at the Bottom of the work sheet a brief explanation keyed to each adjusting entries.