in balance and debits equai dreuit E3-8 Recording Journal Entries Vail Resorts,
ID: 2512205 • Letter: I
Question
in balance and debits equai dreuit E3-8 Recording Journal Entries Vail Resorts, Inc., owns and operates five premier year-round ski resort properties (Vail Mountain, LO3-4 Beav er Creek Resort, Breckenridge Mountain, and Keystone Resort, all located in the Colorado Rocky Mountains, and Heavenly Valley Mountain Resort, located in the Lake Tahoe area of California/Nevada). The company also owns a lift tickets, ski lessons, and ski equipment. The following hypothetical December transactions are typical of those that occur at the resorts. collection of luxury hotels, resorts, and lodging properties. The company sells a. Borrowed $2,300,000 from the bank on December 1, signing a note payable due in six months. b. Purchased a new snowplow for $98,000 cash on December 31. Purchased ski equipment inventory for $35,000 on account to sell in the ski shops. d. Incurred $62,000 in routine maintenance expenses for the chairlifts; paid cash. e. Sold $390,000 of January through March season passes and received cash. f Sold a pair of skis from a ski shop to a customer for $800 on account. (The cost of the skis was $500). Hint: Record two entries.) g. Sold daily lift passes in December for a total of $320,000 in cash. h. Received a $3,500 deposit on a townhouse to be rented for five days in January i. Paid half the charges incurred on account in (c). j. Received $400 on account from the customer in (). k. Paid $245,000 in wages to employees for the month of December. Required 1. Prepare journal entries for each transaction. (Remember to check that debits equal credits and that 2. Assume that Vail Resorts had a $1,000 balance in Accounts Receivable at the beginning of Decem- the accounting equation is in balance after each transaction.) ber. Determine the ending balance in the Accounts Receivable account at the end of December based on transactions (a) through (K).Show your work in T-account format. Recording Journal EntriesExplanation / Answer
Solution:
Debit
Credit
1
Cash
2,300,000
Shortterm note payable
2,300,000
2
Equipment
98,000
Cash
98,000
3
Merchandise inventory
35,000
Accounts payable
35,000
4
Repairs (or maintenance) expense
62,000
Cash
62,000
5
Cash
390,000
Unearned pass revenue
390,000
6
Accounst receivable
800
Ski Shop sales revenue
800
COGS
500
Merchandise inventory
500
7
Cash
320,000
Lift Revenue
320,000
8
Cash
3,500
Unearned pass revenue
3,500
9
Accounts payable
17,500
Cash
17,500
10
Cash
400
Account receivable
400
11
Wages expense
245,000
Cash
245,000
Part-2) Accounts Receivable ending balance = 1,000 + 800 - 400 = 1400
Debit
Credit
1
Cash
2,300,000
Shortterm note payable
2,300,000
2
Equipment
98,000
Cash
98,000
3
Merchandise inventory
35,000
Accounts payable
35,000
4
Repairs (or maintenance) expense
62,000
Cash
62,000
5
Cash
390,000
Unearned pass revenue
390,000
6
Accounst receivable
800
Ski Shop sales revenue
800
COGS
500
Merchandise inventory
500
7
Cash
320,000
Lift Revenue
320,000
8
Cash
3,500
Unearned pass revenue
3,500
9
Accounts payable
17,500
Cash
17,500
10
Cash
400
Account receivable
400
11
Wages expense
245,000
Cash
245,000
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