5.Greek Peak is a ski resort in upstate New York. The company sells lift tickets, ski lessons, and ski equipment. It operates several restaurants and rents townhouses to vacationing skiers. The following hypothetical December 2013 transactions are typical of those that occur at the resort. a)Borrowed $500,000 from the bank on December 1, signing a note payable, due in six months. b)Purchased a new snowplow for $20,000 cash on December 31.c)Purchased ski supplies for $10,000 on account. d)Incurred $22,000 in routine maintenance expenses for the chairlifts; paid cash. e)Received $72,000 for season passes (beginning in the new year).f)Daily lift passes were sold this month for a total of $76,000 cash. g)Received a $320 deposit on a townhouse to be rented for five days in January

Answer and Explanation:

The journal entries are shown below:

a. Cash Dr $500,000

         To Short term Note payable $500,000

(Being the borrowed amount is recorded)

Cash is assets and short term note payable is liabilities

b. Equipment Dr $20,000

          To cash $20,000

(Being the equipment purchased for cash is recorded)

Equipment and cash both are assets

c. Supplies Dr $10,000

        To Account payable $10,000

(Being the purchase of supplies on the account is recorded)

Supplies are assets and account payable is liabilities

d. Repairs and maintenance expense Dr $22,000

               To Cash $22,000

(Being the routine maintenance expenses paid for cash is recorded)

Repair and maintenance expense is an expense and cash is assets

e. Cash Dr $72,000

          To Unearned revenue $72,000

(Being cash received is recorded)

Cash is assets and unearned revenue is liabilities

f. Cash Dr $76,000

          To Service revenue $76,000

(Being cash received is recorded)

cash is assets and service revenue is revenue

g. Cash Dr $320

          To Unearned revenue $320

(Being cash received is recorded)

Cash is assets and unearned revenue is liabilities

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