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

Following are the journal entries for each transaction:

Step-by-step 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