Question

Rowland & Sons Air Transport Service, Inc., has been in operation for three years. The following transactions occurred in February:

Feb. 1 Paid $200 for rent of hangar space in February.
Feb. 4 Received customer payment of $800 to ship several items to Philadelphia next month.
Feb. 7 Flew cargo from Denver to Dallas; the customer paid in full ($900 cash).
Feb. 10 Incurred and paid $1,200 in pilot wages for flying in February.
Feb. 14 Paid $100 for an advertisement run in the local paper on February 14.
Feb. 18 Flew cargo for two customers from Dallas to Albuquerque for $2,505; one customer paid $795 cash and the other asked to be billed $1,710.
Feb. 25 Purchased on account $1,730 in supplies for future use on the planes.

Required:
Prepare accrual basis journal entries for each transaction.

Answer 1

Answer:

Explanation:

Feb. 1

prepaid rent   200

           Cash           200

To record the advance rent payment

Feb. 4

Cash  800

   Advance liability 800

To record received for future supplies

Feb. 7

Cash 900

     Contract liability 900

Payment for the service to be provided

Feb. 10

Advance wages      1200

                Cash              1200

Advance wages payment to pilot

Feb. 14

Adv to Advertise  100

      Cash                       100

Advance payment for advertisement expense.

Feb. 18

Cash  795

Account receiveable 1710

                     Revenue                2510

To record the accrued revenue

Feb. 25

inventory  1730

  Account payable 1730

purchases on credit