Question

On April 1, 2017, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month.

April		1		Nozomi invested $48,000 cash and computer equipment worth $40,000 in the company in exchange for common stock.
		2		The company rented furnished office space by paying $1,900 cash for the first month’s (April) rent.
		3		The company purchased $1,700 of office supplies for cash.
		10		The company paid $2,000 cash for the premium on a 12-month insurance policy. Coverage begins on April 11.
		14		The company paid $1,100 cash for two weeks' salaries earned by employees.
		24		The company collected $24,000 cash on commissions from airlines on tickets obtained for customers.
		28		The company paid $1,100 cash for two weeks' salaries earned by employees.
		29		The company paid $300 cash for minor repairs to the company's computer.
		30		The company paid $800 cash for this month's telephone bill.
		30		The company paid $2,000 cash in dividends.

The company's chart of accounts follows:

101	Cash	405	Commissions Earned
106	Accounts Receivable	612	Depreciation Expense—Computer Equip.
124	Office Supplies	622	Salaries Expense
128	Prepaid Insurance	637	Insurance Expense
167	Computer Equipment	640	Rent Expense
168	Accumulated Depreciation—Computer Equip.	650	Office Supplies Expense
209	Salaries Payable	684	Repairs Expense
307	Common Stock	688	Telephone Expense
318	Retained Earnings	901	Income Summary
319	Dividends

Use the following information:

1. Two-thirds (or $111) of one month’s insurance coverage has expired.
2. At the end of the month, $500 of office supplies are still available.
3. This month’s depreciation on the computer equipment is $400.
4. Employees earned $310 of unpaid and unrecorded salaries as of month-end.
5. The company earned $2,300 of commissions that are not yet billed at month-end.

Required:
1. & 2. Prepare journal entries to record the transactions for April and post them to the ledger accounts in Requirement 6b. The company records prepaid and unearned items in balance sheet accounts.
3. Using account balances from Requirement 6b, prepare an unadjusted trial balance as of April 30.
4. Journalize and post the adjusting entries for the month and prepare the adjusted trial balance.
5a. Prepare the income statement for the month of April 30, 2017.
5b. Prepare the statement of retained earnings for the month of April 30, 2017.
5c. Prepare the balance sheet at April 30, 2017.
6a. Prepare journal entries to close the temporary accounts and then post to Requirement 6b.
6b. Post the journal entries to the ledger.
7. Prepare a post-closing trial balance.

Answer 1

Question 1: Journal Entries

Question 1: Journal Entries

Question 1 and 4: Journal Entries

Question 4: Journal Entries of Adjusting Entries

Question 1 & 2 & 4: T- accounts

Question 1 & 2 & 4: T-accounts

Question 1 & 2 & 4: T-accounts

Question 1 & 2 & 4: T-accounts

Question 1 & 2 & 4: T-accounts

Question 1 & 2 & 4: T-accounts

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Question 3:

Question 4: Adjusted Trial Balance

Question 4 Adventure Travel Adjusted Trial Balance April 30, 20XX Debit Credit Cash Accounts Receivable Office Supplies Prepaid Insurance Computer equipment Ac 61,100 $ 2,300 500 $ 1,889 40,000 cumulated Depreciation - Computer Equipment Salaries payable Common Stock Commission earned Dividends 400 310 88,000 26,300 $ 2,000

Question 4: Adjusted Trial Balance