Mountain Adventure Biking Park was started on May 1 by Dustin Tanner. The following events and transactions are for May:
May 1 Tanner invested $70,000 cash in the business.
3 Purchased an out-of-use ski hill for $355,000, paying $35,000 cash and signing a five-year, 4.5% note payable for the balance. The $355,000 purchase price consisted of land $225,000, building $75,000, and equipment $55,000.
3 Purchased a one-year insurance policy effective May 1 for $9,360. Paid the first month's premium of $780.
8 Paid $1,950 for advertising expenses.
15 Received $5,400 cash from customers for admission fees.
16 Paid salaries to employees, $2,600.
20 Billed a customer, Celtic Fern Ltd., $2,750 for admission fees for exclusive use of the park that day. Celtic Fern Ltd. paid $500 cash and agreed to pay the amount owing within 10 days.
22 Hired a park manager to start June 1 at a salary of $4,000 per month.
29 Received the balance owing cash from Celtic Fern Ltd. for the May 20 transaction.
30 Received $5,750 cash for admission fees.
31 Paid $6,533 on the note payable, of which $1,200 is interest expense.
31 Dustin Tanner, the owner, withdrew $1,800 cash for his personal use.
31 Paid salaries to employees, $3,800.
The company's chart of accounts includes the following accounts: Cash; Accounts Receivable; Prepaid Insurance; Land; Building; Equipment; Accounts Payable; Notes Payable; D. Tanner, Capital; D. Tanner, Drawings; Admissions Revenue; Advertising Expense; Salaries Expense; and Interest Expense.
Instructions
Journalize the May transactions.
TAKING IT FURTHER
After Dustin has reviewed the journal entries, he complains that they don't seem to be very useful. Explain to Dustin the purpose of the journal entries and the next step in the accounting cycle. Include in your answer whether or not Dustin will find any useful information after the next step is completed.