Bel Air Flying Service started operations on December $1,20.$ The trial balance in Figure $13\mathrm{.}6$ was prepared at month$-$end. Record the following adjustments in the General Journal, then make an interim statement of profit$/$loss after the first month of business. Use a set$-$up similar to the informal statement in Figure $13\mathrm{.}1.$

$($a$)$When renting the office and hangar, Bel Air paid for six months in advance. This amount was charged to Rent Prepaid. One month's worth of rent is now to be recognized as an expense, $$2,000.$

$($b$)$One month's worth of the $12-$month insurance policy is now to be recognized as an expense, $$1,300.$

$($c$)$Interlake Air Services provides the aircraft maintenance work for Bel Air at a cost of $$2,500$ per month. Bel Air had paid for three months in advance and charged the total to Maintenance Prepaid. One month's worth of this prepaid maintenance is now to be recognized as an expense.

Figure $13\mathrm{.}6$

Trial Balance of Bel Air

Account Debit Credit

Cash $37,000\mathrm{.}00$

Rent Prepaid $12,000\mathrm{.}00$

Insurance Prepaid $15,600\mathrm{.}00$

Maintenance Prepaid $7,500\mathrm{.}00$

Aircraft $240,000\mathrm{.}00$

Accounts Payable $160,000\mathrm{.}00$

Capital, Jackson R$.75,000\mathrm{.}00$

Passenger Revenue $363,300\mathrm{.}00$

Advertising Expense $58,800\mathrm{.}00$

Fuel Expense $124,600\mathrm{.}00$

Salaries Expense $38,900\mathrm{.}00$

Spare Parts Expense $63,900\mathrm{.}00$

$598,300\mathrm{.}00598,300\mathrm{.}00$

  a normal General Journal entry.

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