Question

On April 1, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company's first month. April i Nozomi invested $30,000 cash and computer equipment worth $20,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $1,800 cash for the first month's (April) rent. 3 The company purchased $1,000 of office supplies for cash. 10 The company paid $2,400 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. 14 The company paid $1,600 cash for two weeks' salaries earned by employees. 24 The company collected $8,000 cash for commissions earned. 28 The company paid $1,600 cash for two weeks' salaries earned by employees. 29 The company paid $350 cash for minor repairs to the company's computer. 30 The company paid $750 cash for this month's telephone bill. 30 The company paid $1,500 cash in dividends. The company's chart of accounts follows. 101 Cash 106 Accounts Receivable 124 Office Supplies 128 Prepaid Insurance 167 Computer Equipment 168 Accumulated Depreciation-Computer Equip. 209 Salaries Payable 307 Common Stock 318 Retained Earnings 319 Dividends 405 Commissions Earned 612 Depreciation Expense-Computer Equip. 622 Salaries Expense 637 Insurance Expense 640 Rent Expense 650 Office Supplies Expense 684 Repairs Expense 688 Telephone Expense 901 Income Summary Use the following information: a. Prepaid insurance of $133 has expired this month. b. At the end of the month, $600 of office supplies are still available. c. This month's depreciation on the computer equipment is $500. d. Employees earned $420 of unpaid and unrecorded salaries as of month-end. e. The company earned $1,750 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 the adjusting entries for the month and prepare the adjusted trial balance. 5a. Prepare the income statement for the month of April 30. 5b. Prepare the statement of retained earnings for the month of April 30. 5c. Prepare the balance sheet at April 30. 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

Date General Journal Debit Credit Apr-01 Cash Computer equipment Common stock 30000 20000 500001 1800 Apr-02 Rent expense cash 1800 1000 Apr-03 Office supplies cash 1000 2400 Apr-10 Prepaid insurance cash 2400 1600 Apr-14 Salaries expense cash 1600 8000 Apr-24 Cash commissions earned 8000 1600 Apr-28 Salaries expense cash 1600 350 Apr-29 Repairs expense cash 350| 750 Apr-30 Telephone expense cash 750 1500 Apr-30 Dividends cash 1500 Adjusting entries Insurance expense Prepaid insurance 133 400 Office supplies expense office supplies 400 C. 500 dep. Expense -computer Accumulated dep.-computer 420 Salaries expense salaries payable 420 e. 1750 Accounts receivable commissions earned 1750 Closing entries 9750 Commissions earned Income Summary 9750 7553 1 252 Income summary dep. Expense -computer Salaries expense Insurance expense Rent expense Office supplies expense Repairs expense Telephone expense 500 3620 133 1800 400 350 750 2197 Income summary Retained earnings 2197 1500 Retained earnings Dividends 1500

Common stcok Date Debit Credit Apr-01 50000 Balance 50000 Cash Date Debit Credit Balance Apr-01 3000 30000 Apr-02 1800128200 Aor-031 1000 27200 Apr-101 24001 24800 Apr-14 1600123200l Apr-241 8000 31200 Apr-28 1600129600 Apr-29 350 29250 Aor-301 7501 28500 Apr-301 1500 27000 Commissions earned Date Debit Credit Anr-241 8000 e. 1750 97501 Balance 80001 9750 Computer equipment Date Debit Credit Balance Apr-01 20000 20000 Date c. Accumulated dep.-computer Debit Credit Balance 500 500 Rent expense Date Debit Credit Balance Apr-02| 1800 1800 18000 Date Id Salaries payable Debit Credit Balance 4 2014201 Office supplies Date Debit Credit Balance Apr-03 1000 1000 Ib. 4001 6001 Date Th Prepaid insurance Date Debit Credit Apr-10 2400 133 retained earnings Debit Credit Balance 21971 21971 15001 6 971 Balance 2400 2267 TT T TT Salaries expense Date Debit Credit Balance Apy-14 1600 11600 A -28 1600 32001 Id 1 420 3620 ls 36200 Repairs expense Date Debit Credit Balance Apr-29 350 3500 Telephone expense Date Debit Credit Balance Apr-30 7 50 7500 III Date A li Dividends Debit Credit Balance -301 1500 1500l 15000 Insurance expense Debit Credit 133 Date Ja. Balance Date lbs. office supplies expense Debit Credit Balance 400 400 Date dep. Expense computer Debit Credit Balance 500 scol 500 JE I | Date c. Accounts receivable Debit Credit 1 1750 I Balance 1750)

Adjustments Unadjusted trial balance 27000 Adjusted trial balance 27000 1750 1750 600 1000 2400 20000 400 133 2267 20000 500 420 500 420 50000 50000 1 1500 15001 Cash Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated dep.-computer Salaries payable Common stock Dividends Commissions earned dep. Expense-computer Salaries expense Insurance expense Rent expense Office supplies expense Repairs expense Telephone expense Total 8000 17501 9750 500 3200 420 133 1800 400 3620 133 1800 400 350 750 6067060670 350 7501 58000 58000 3203_ 3203 Income statement Commissions earned 1 9750 Less:expenses dep. Expense -computer Salaries expense Insurance expense Rent expense Office supplies expense Repairs expense Telephone expense Total expenses 500 36201 133 1800 400 350 750 7553 Net Income 2197 Statement of retained earnings 0 2197 Opening Balance Add: Net Income Less: Dividends Closing balance -1500 697 1

Balance sheet Cash Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated dep.-computer Total Assets 27000 1750 600 2267 20000 -50019500 51117 Liabilities Salaries payable 420 Equity Common stock Retained earnings Total liabilties & equity 50000 697 50697 51117 27000 1750 600 Post closing trial balance Cash Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated dep.-computer Salaries payable Common stock retained earnings total 2267 20000 500 420 50000 697 51617 51617