Blujay Episode5

MGMT 210 Financial Accounting BluJay Aviation, Episode 5

Scene Wren and Brad go over the accounting transactions for March and the company’s financial statements for the first quarter in BluJay’s hangar office. Wren: Look at my accounting entries this month, they are pretty much the same as last month, but I did adjust for earning two-thirds of the realtors advance. That’s what you said based on the number of photos, right? Brad: Yes, that’s the amount we earned in March of the $2,100 that was paid up front. Wren: Well, here’s the breakdown of the entries: [Cut to spreadsheet with March transactions. Leave up while Wren continues.]

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First I paid the fuel bill for last month of $720. Then I recorded the receipt from the advertisers from last month of $800.

The rest of the entries are really adjusting entries. • Accrued the fuel expense for this month which was $850. • Accrued the revenue of $2,000 for flying banners this month; the clients have said they will pay us next month. • Adjusted for the rent expense of $500, the insurance expense of $300 and the depreciation expense of $750 • The last adjustment was for the earned revenue from the realtors of $1,400

BluJay Aviation, Episode 5

Brad: Now that we’ve been in business for three months, can you draw up financial statements so we can see how we are doing? Wren: I’ve done that already; let’s look at them. [Cut to Income Statement and leave up.]

The first is the income statement for the first quarter, although we really only operated for two months. Brad: Well, we managed to eke out a tiny profit. Are we taking all of our costs into consideration? I guess we’re working for free. Wren: That’s typical of a new business. I know some business owners that worked for over a year before taking any money out. We need to keep our jobs for now. But we should be thinking about the future. Brad: Even with the discount from the FBO our fuel costs are going up. We really don’t have any costs to cut. We...