Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 16

Recording Journal Entries and Determining Net Income
Greek 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 2013 transactions are typical of those that occur at the resort.
a. Borrowed $500,000 from the bank on December 1, signing a note payable, due in six months.
b. Purchased a new snowplow for $20,000 cash on December 31.
c. Purchased ski supplies for $10,000 on account.
d. Incurred $22,000 in routine maintenance expenses for the chairlifts; paid cash.
e. Received $72,000 for season passes (beginning in the new year).
f. Daily lift passes were sold this month for a total of $76,000 cash.
g. Received a $320 deposit on a townhouse to be rented for five days in January 2014.
h. Paid half the charges incurred on account in ( c ).
i. Paid $18,000 in wages to employees for the month of December.
Required:
Prepare accrual basis journal entries for each transaction. Be sure to categorize each account as an Asset (A), Liability (L), Stockholders' Equity (SE), Revenue (R), or Expense (E), and check that debits equal credits for each journal entry. Also, calculate the company's preliminary net income.