P$2-62.$ Analyzing Transactions Using the Financial Statement Effects Template and Preparing an

Income Statement $($FSET$)$

On June $1,$ a group of pilots in Melbourne, Australia, formed Outback Flights by issuing common

stock for $$25,000$ cash. The group then leased several amphibious aircraft and docking facilities,

equipping them to transport campers and hunters to outpost camps owned by various resorts in

remote parts of Australia. The following transactions occurred during June, and company accounts

include the following: Cash, Accounts Receivable, Prepaid Insurance, Accounts Payable, Common

Stock, Retained Earnings, Flight Services Revenue, Rent Expense, Entertainment Expense,

Advertising Expense, Insurance Expense, Wages Expense, and Fuel Expense.

Issued common stock for $$25,000$ cash.

Paid $$2,400$ cash for June rent of aircraft, dockage, and dockside office. The leases are all for

less than $12$ months$-$the company is evaluating the business model before they purchase.

Received $$800i_{pg\mathrm{.}2-49}$ for the cost of a reception to entertain resort owners in June.

Paid $$450$ cash for June advertising in various sport magazines.

Paid $$900$ cash for insurance premium for July.

Rendered flight services for various groups for $$11,350$ cash.

Billed client $$1,450$ for transporting personnel, and billed various firms for $$6,500$ in flight

services.

Paid $$750$ cash to cover accounts payable.

Received $$6,600$ on account from clients in transaction $7.$

Paid $$8,000$ cash to cover June wages.

Received $$1,750$ invoice for the cost of fuel used during June.

Declared and paid a $$1,500$ cash dividend.

REQUIRED

a$.$ Report the effects for each of the separate transactions $1$ through $12$ using the financial state$-$

ment effects template. Total all columns and prove that $(1)$ assets equal liabilities plus equity

on June $30$ and $(2)$ revenues less expenses equal net income for June.

b$.$ Prepare an income statement for the month of June.

P$2-63.$ Recording Transactions in Journal Entries and T$-$Accounts

Use the information in problem $2-62$ to complete the following requirements.

Required

a$.$ Prepare journal entries for each of the transations $1$ through $12.$

b$.$ Set up T$-$accounts for each of the accounts used in part a and post the journal entries to those T$-$Accounts.

Answer a and b for $2-62$ and $2-63.$