Question

Vail Resorts, Inc., owns and operates 11 premier year-round ski resort properties (located in the Colorado Rocky Mountains, the Lake Tahoe area, the upper midwest, Vermont, and Australia). The company also owns a collection of luxury hotels, resorts, and lodging properties. The company sells lift tickets, ski lessons, and ski equipment. The following hypothetical December transactions are typical of those that occur at the resorts.

a. Borrowed $3,000,000 from the bank on December 1, signing a note payable due in six months.
b. Purchased a new snowplow for $90,000 cash on December 31.
c. Purchased ski equipment inventory for $37,000 on account to sell in the ski shops.
d. Incurred $59,000 in routine repairs expense for the chairlifts; paid cash.
e. Sold $368,000 of January through March season passes and received cash.
f. Sold a pair of skis from inventory in a ski shop to a customer for $570 on account. (The cost of the skis was $310). (Hint: Record two entries.)
g. Sold daily lift passes in December for a total of $273,000 in cash.
h. Received a $2,200 deposit on a townhouse to be rented for five days in January.
i. Paid half the charges incurred on account in (c).
j. Received $470 on account from the customer in (f).
k. Paid $263,000 in wages to employees for the month of December.

Required:
a. Prepare journal entries for each transaction. (Remember to check that debits equal credits and that the accounting equation is in balance after each transaction.)
b. Assume that ending balance in the Accounts Receivable account at the end of December based on transaction (A) through (K).

Answer 1

Transaction The General Journal Debit Cash

1 a Cash 3,000,000

Notes payable 3,000,000

2 b Equipment 90,000

Cash 90,000

3 c Inventory 37,000

Accounts payable 37,000

4 d Repair expense 59,000

Cash 59,000

5 e Cash 368,000

Unearned pass revenue 368,000

6 f(1) Accounts receivable 570

Ski shop sales revenue 570

7 f(2) Cost of goods sold 310

Inventory 310

8 g Cash 273,000

Lift pass revenue 273,000

9 h cash 2,200

Unearned rent revenue 2,200

10 i Accounts Payable 18500

Cash (37,000/2) 18500

11 j Cash 470

Accounts receivable 470

12 k Salaries expense 263,000

Cash 263,000

The accounts receivable balance = 1000 + 570 - 310

= 1260