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Transaction Analysis and Trial Balance

BC Back-Country Airlines, Inc., operates leased amphibious aircraft and docking facilities, equipping the firm to transport campers and hunters from British Columbia, Canada, to outpost camps owned by various resorts. On August 1, the firm's trial balance was as follows:

BC BACK-COUNTRY AIRLINES, INC. Unadjusted Trial Balance August 1, 2016
	Debit	Credit
Cash	$82,800
Accounts Receivable	23,400
Accounts Payable		$1,900
Notes Payable		3,200
Common Stock		80,000
Retained Earnings		21,100
Totals	$106,200	$106,200

During August, the following transactions occurred:

Aug	1	Paid August rental cost for aircraft, dockage, and dockside office, $6,200.
	2	Paid the insurance premium for August, $3,000.
	3	Paid for August advertising in various sports magazines, $1,700.
	4	Rendered fly-in services for various groups for cash, $16,950.
	5	Billed the Canadian Ministry of Natural Resources for services in transporting mapping personnel, $4,100.
	6	Received $20,600 on account from clients.
	7	Paid $1,900 on accounts payable.
	8	Billed various clients for services, $19,600.
	9	Paid interest on an outstanding note payable for August, $75.
	10	Paid August wages, $15,000.
	11	Received invoice for the cost of fuel used during August, $3,800.
	12	Paid a cash dividend, $4,700 (debit Retained Earnings).

Required

a. Set up accounts for each item in the August 1 trial balance and enter the beginning balances. Also provide similar accounts for the following items: Service Fees Earned, Wage Expense, Advertising Expense, Rent Expense, Fuel Expense, Insurance Expense and Interest Expense. Create journal entries and record the transactions for August in the appropriate T-accounts, using the dates given.

General Journal
Date	Description	Debit	Credit
1
2
3
4
5
6
7
8
9
10
11
12

Cash
Beg
1
2
3
4
5
6
7
8
9
10
11
12
Bal

Account Receivable
Beg
5
6
8
Bal
Notes Payable
Beg
Bal
Accounts Payable
Beg
7
11
Bal
Common Stock
Beg
Bal
Retained Earnings
Beg
12
Bal
Interest Expenses
9
Bal
Service Fees Earned
4
5
8
Bal
Rent Expenses
1
Bal
Wage Expenses
10
Bal
Insurance Expenses
2
Bal
Advertising Expenses
3
Bal
Fuel Expenses
11
Bal

b. Prepare a trial balance as of August 31, 2016.

BC Back-Country Airlines, INC Trial Balance August 31, 2016
	Debit	Credit
Cash
Account Receivable
Account Payable
Common Stock
Retained Earnings
Service Fees Earned
Wage Expenses
Rent Expenses
Fuel Expenses
Insurance Expense
Interest Expense
Notes Payable
Advertising Expense
Totals

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