Hoping someone can check my answer for a homework question. They did not give much info, so I want to verfiy I am correct (for example: not sure if the month a pre-paid rent hits, if it deducts that month).

Thanks in advance!



GUNFLINTADVENTURES Adjusted Trial Balance June 30
Debit Credit
Prepaid airport rent $7,200
Unexpired insurance 3,500
Airplane 240,000
Accumulated depreciation: airplane $36,000
Unearned passenger revenue 90,000

Plane depreciates over 20 yrs; 6-mos rent pre-paid May 1; unexpired insurance remins from 12-mos policy purchased 2/1; Passenger revenue earned June $75,000

Question Answer
1. The age of the airplane 36 months
2. The monthly airport rent expense $1,440
3. The amount paid for the 12-month insur policy on 2/1 $6,000

GUNFLINT ADVENTURES AdjustingEntries
June 30 Depreciation Expense: Airplane ……………………… 1,000
Less: Accumulated Depreciation: Airplane ……… 1,000
Monthly Depreciation on Airplane ($240,000/240 mo.)
June 30 Airport Rent Expense …………………………………………… 1,440
Prepaid Rent ……………………………………….. 1,440
Airport Rent expense for June
June 30 Insurance Expense ……………………………………… 500
Unexpired Insurance ……………………………….. 500
Insurance expense for June

June 30 Unearned passenger revenue …………………………. 75,000
Earned passenger revenue ……………………….. 75,000
(portion of earned revenue for June)

Quote:

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Originally Posted by kandykane

1. The age of the airplane

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You said 36 months, and I agree with you.

Quote:

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Originally Posted by kandykane

2. The monthly airport rent expense

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- May 1, prepaid for 6 months
- On June 30, $7,200 left in the prepaid account (4 months remaining).

7,200 / 4 = 1,800

Therefore, the monthly rent expense is $1,800

Quote:

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Originally Posted by kandykane

3. The amount paid for the 12-month insur policy on 2/1

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You said $6,000 and I agree with you.

Thank you so much for the quick response and your help.