Answer to Question #156876 in Accounting for mariam

Question

Problem 4-1- Transactions and Related Adjusting Entries Pete's Parasailing takes tourists on parasailing rides over South Beach in Miami, Florida. Parasailing tickets sell for $100 per customer. The company adjusts its accounts at the end of each year. Below are selected transactions from the year 20x5. Purchased a used boat for $56.000 cash. Estimated useful life of the boat is 5 years. Estimated salvage value $0. Jan. 1 Purchased office supplies from Best Buy Supplies Company for $800 cash. On December 31, $540 of these supplies has been used. Feb. 2 The company paid $18.000 for a one-year liability insurance policy with Florida Insurance Company. Apr. 1 A one year bank loan in the amount of $42,000 was obtained. Interest is to be computed at an annual rate of 8% and is payable when the loan becomes due on September 1. 20x6. Sept. 1 Received cash for 50 tickets sold for future rides through local hotels. On December 31, 40 of these tickets had been used by customers. Dec. 1 Dec. 31 Salaries earned by employees that have not yet been paid amount to $800. Unrecorded Income Tax Expense acerued on December 31 is $2.200. This amount will not be paid until January 15. 20x6. Dec. 31 Instructions For each of the above transactions record the appropriate journal entry and its related adjusting entry on December 31. 20x5. Be sure to include an explanation.

Answer 1

debit investment in non-current assets credit settlements with suppliers - 56 000

debit payments with suppliers credit cash register - 56 000

debit materials credit settlements with suppliers - 800

debit payments with suppliers credit cash register - 800

debit general expenses credit materials - 540

debit payments with the insurance company credit settlement account - 18 000

debit current account credit short-term loans - 42 000

debit payments to customers credit sales - 5 000

debit settlements with staff credit settlements on deposited amounts - 800

debit profit and loss credit income tax calculations - 2200

debit expense account credit depreciation of fixed assets - 2 240: every month

debit short-term loans credit current account - 42 845,10 - repayment of the loan