Rowland & Sons Air Transport Service Inc. has been in operation for three years. The following transactions occurred in February: February + Paid $ 1,900 for rent of hangar space in February. Purchased fuel costing $ 450 on account for the next flight to Winnipeg.
4 Received customer payment of $ 950 to ship several items to Montreal next month.
7 Flew cargo from Ottawa to Edmonton; the customer paid $ 1,240 for the air transport.
10 Paid pilot $ 4,000 in wages for flying in January.
14 Paid $ 600 for an advertisement in the local paper, to run on February 19.
18 Flew cargo for two customers from Regina to Calgary for $ 1,800; one customer paid $ 500 cash and the other asked to be billed.
25 Purchased spare parts for the planes costing $ 1,350 on account.
27 Declared a $ 1,300 cash dividend to be paid in March.
1. Prepare a journal entry to record each transaction. Be sure to categorize each account as an asset (A), a liability (L), shareholders’ equity (SE), a revenue (R), or an expense (E).
2. Show the effects (direction and amount) of each transaction on net earnings and cash.