Question

E3-11 Recording Journal Entries and Determining Net Income [LO 3-2, LO 3-3) Pikes Peak is a ski resort in upstate New York. The company sells lift tickets, ski lessons, and ski equipment. It operates several restaurants and rents townhouses to vacationing skiers. The following hypothetical December transactions are typical of those that occur at the resort a Borrowed $725,000 from the bank on December 1, signing a note payable, due in six months. b. Purchased a new snowplow for $42,000 cash on December 31, c Purchased ski supplies for $14,000 on account d. Incurred $23,900 in routine maintenance expenses for the chairlifts; paid cash. e. Received $87,000 for season passes (beginning in the new year). 7 Daily lift passes were sold this month for a total of $81,800 cash. g. Received a $425 deposit on a townhouse to be rented for five days in January h. Pald half the charges incurred on account in (c). Lincurred and paid $27,500 in wages to employees for the month of December

Answer 1

Transaction	General Journal	Debit	Credit
a.	Cash	7,25,000
	Notes payable		7,25,000
b.	Snow Plow	42,000
	Cash		42,000
c.	Ski Supplies	14,000
	Accounts Payable		14,000
d.	Routine Maintainance expenses	23,900
	Cash		23,900
e.	Season Passes	87,000
	Season Passes Received in Advance		87,000
f.	Cash	81,800
	Daily lift Passes		81,800
g.	Cash	425

	Accrued Rent		425
h.	Accounts Payable	7,000
	Cash		7,000
i.	Wages	27,500
	Cash		27,500

Loan 725000 +season passs    87000 +Daily lift passs 81800 +Rent 425	8,94,225
Snow plow 42000 +Routine maintainance expenses 23900 +Accounts payable 7000 +Wages 27500	(100,400)

Preliminary net income

7,93,825