Assignment
Island Hopper is an airline providing passenger and freight service among some Pacific islands. The accounts are adjusted and closed each month. On June 30 the trial balance shown below was prepared from the ledger. (20)
ISLAND HOPPER
Trial Balance
June 30, 2001
Cash $23,600
Accounts Receivable 7,200
Prepaid Rent 9,600
Unexpired Insurance 21,000
Aircraft 1,200,000
Accumulated Depreciation: Aircraft $380,000
Notes Payable 600,000
Unearned passenger Revenue 60,0000
Mary Earhart, Capital 230,850
Mary Earhart, Drawing 7,000
Freight Revenue 130,950
Fuel Expense 53,800
Salaries Expense 66,700
Maintenance Expense 12,900
$1,401,800 $1,401,800
Other Data:
a) The aircraft is being depreciated by the straight-line method over a period of 10 years (120 months)
b) The amount shown as Unearned Passenger Revenue represents tickets sold to customers in advance of flights. During June, $36,650 of this amount was earned by the airline (Credit Passenger Revenue).
c) Salaries earned by employees but not yet paid amount to $3600 at June 30.
d) Accrued interest on notes payable amounts to $6,000 at June 30 and has not yet been recorded. Interest is paid monthly, within 10 days of the end of the month. The $600,000 note payable matures on December 31,2003.
e) One of Island Hopper's regular customers is Pacific Trading Company. The airline keeps track of the weight of shipments carried for the trading company during the month and sends a bill shortly after month-end. No entry has yet been made to record $4,600 earned in June carrying freight for Pacific Trading Company.
f) Three months' rent ($14,400) had been prepaid on May 1.
g) On April 1, a 12-month insurance policy had been purchased for $25,200.
Task
1. Prepare an income statement and balance-sheet for the month ended June 30, 2001.
2. Prepare adjusting and closing entries for 2001.