Question

Blaine Air Transport Service, Inc., providing air delivery service for businesses, has been in operation for three years. The following transactions occurred in February: February 1 Paid $250 for rent of hangar space in February. February 2 Purchased fuel costing $580 on account for the next flight to Dallas. February 4 Received customer payment of $860 to ship several items to Philadelphia next month. February 7 Flew cargo from Denver to Dallas; the customer paid $840 for the air transport. February 10 Paid $170 for an advertisement in the local paper to run on February 19. February 14 Paid pilot $2,500 in wages for flying in January (recorded as expense in January). February 18 Flew cargo for two customers from Dallas to Albuquerque for $4,100; one customer paid $1,600 cash and the other asked to be billed. February 25 Purchased on account $2,460 in spare parts for the planes. February 27 Declared a $130 cash dividend to be paid in March.
Required:
Prepare journal entries for each transaction. Be sure to categorize each account as an asset (A), liability (L), stockholders

Answer 1

Answer:

Following are the journal entries for each transaction:

Explanation:

Date                                       Account-title                     Dr.         Cr.

February 1                             expense of rent                    250  

                                                           Cash                                         250

February 2                              expense of fuel                   580  

                                                  Payable Accounts                         580

February 4                                     Cash                           860  

                                                Unearned income                          860

February  7                                         Cash                   840  

                                                     Transport income                          840

February 10                               Advertising expense     170  

                                                              Cash                                   170

February 14                                  Payable Wages            2500  

                                                                Cash                                2500

February 18                                          Cash                    1800  

                                        Accounts receivable (4100-1600)               2500  

                                                    Transport income                         4100

February 25                                      Supplies                    2460  

                                                       Payable Accounts                          2460

February  27                      Retained earnings/ Cash dividend 130  

                                                        Dividends payable                   130