Exercise 3 - 1 ACCOUNTING Exercise 3 American Airlines 2...

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Unformatted text preview: 1 ACCOUNTING Exercise 3 American Airlines 2 ECONOMIC EVENTS 1. Issue 1,000,000 shares of common stock. Par value is $5 per share. Selling price is $10 per share. 2. Acquire 5 aircraft from Boeing at $200,000,000 each. The bank pays for the aircraft. We sign a ten year, 10% Note Payable with the bank. 3. Pay $3,000,000 for route authorities. 4. Receive $200,000,000 cash from customers for flight reservations. 5. Pay $20,000,000 for salaries. 6. Pay $20,000,000 for jet fuel used on flights. 7. Accrue $1,000,000 estimated cost to provide future free flights under Frequent Flyer Rewards Program. 8. 90% of the flights from #4 above take place. 9. Loan $500,000 to a major supplier strapped for cash. Five year term, 10% interest rate. 10. End of year. Record one year depreciation on the aircraft (20 year lives). 11. End of year. Accrue one year interest on Note Receivable. 12. End of year. Accrue one year interest on the Notes Payable. 13. End of year. Accrue $2,000,000 for unpaid salaries. 14. Transfer 12,950,000 Net Income to Retained Earnings. 3 JOURNAL ENTRIES 1. 2. 3. 4. 5. 4 JOURNAL ENTRIES 6. 7. 8. 9. 10. 5 JOURNAL ENTRIES 11. 12. 13. 14. 15. 6 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 7 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 8 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 9 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 10 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 11 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 12 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 13 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 14 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 15 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 16 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 17 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 18 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 19 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 20 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 21 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 22 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 23 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 24 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 25 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 26 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 27 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 28 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 29 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 30 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 31 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 32 _________________ A/C Reference Transaction Current Balance Debit Credit Debit Credit 33 TRIAL BALANCE…. .page 1 Account Debit Credit 34 TRIAL BALANCE…. .page 2 Account Debit Credit Total 35...
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This note was uploaded on 11/02/2010 for the course ACCT 325 taught by Professor Anderson,p during the Winter '09 term at Azusa Pacific.

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Exercise 3 - 1 ACCOUNTING Exercise 3 American Airlines 2...

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