Airways Pty Ltd Questions 2022

QUESTION 1
This question has two parts – Part A and Part B. Total for both
parts is 20 marks.
QUESTION 1
AM Airways Pty Ltd (AMAPL) operates regonal air services to corporates and
the general public in South Australia. Its financial year ends on the 30th
June. You are provided with transactions which occurred during March
20X1. Each transaction is provided separately below together with a blank
general journal template.
Required
Prepare general journal entries for AM Airways Pty Ltd (AMAPL) for a
selection of transactions for March 20X1 which are listed below. If you
believe a general journal entry is not required then just make that comment
in the journal template. In keeping with AMAOL’s high standards each
journal entry you write must be fully complete and correct otherwise no
marks will be awarded for that entry. Narrations are required. (Ignore GST.)
12 marks
March 1: A corporate customer paid $11,560 for flights taken in
January.
Date Particulars DR CR
March 1 Bank $11,560
Corporate Customer $11,560
($11,560 paid by corporate
customer against flight taken in
January)
March 7: AMAPL outsources all its IT requirements. This day it paid
$125,000 in advance for the next 6 months IT services.
AMAPL recognises all such transactions to an asset account.
Date Particulars DR CR
March 7 Prepaid Expense $41,667
IT Services Expense $83,333
Bank 125000
(Amount paid for 6 month in respect
of IT services has been booked as
expense for 4 month and prepaid
expense for 2 month)
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2

March 11: AMAPL has a Loan with the Easi Bank. Interest of $23,455
was paid in arrears.
Date Particulars DR CR
March
11 Interest Expense $23,455
Bank $23,455
(Interest on loan from Easi bank has
been paid)
March 15: AMAPL owned shares in another company as an
investment. It decided to sell those shares and received
$255,670 for them.
Date Particulars DR CR
March
15 Bank $255,670
Investment $255,670
( Amount of $ 255,670 has been
received on disposal of
investment)
March 16: Bought office and stationery supplies on credit worth
$34,431 which will be used over a 2 year period.
Date Particulars DR CR
March
16 Office and Stationery Supplies $34,431
Sundry Creditors $34,431
(Office and Stationery supplies
purchased on credit)
March 28: AMAPL also provide flying lessons to the public. A complete
program consists of 15 monthly lessons and each lesson costs
$330. 8 people signed up for the entire program and they all
paid today. The first lesson is on 15th May 20X1.
Date Particulars DR CR
3

March
28 Prepaid Expense $4455
Training Expense $495
Bank $4950
(Advance for month of 13.5 month
and expense for 1.5 month has been
booked in resepect of lesson to
public)
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