Question

On April 1, 2018, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company's first month. April 1 Nozomi invested $39,000 cash and computer equipment worth $40,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $2,800 cash for the first month's (April) rent. 3 The company purchased $1,100 of office supplies for cash. 10 The company paid $2,900 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. 14 The company paid $1,500 cash for two weeks' salaries earned by employees. 24 The company collected $12,000 cash on commissions from airlines on tickets obtained for customers. 28 The company paid $1,500 cash for two weeks' salaries earned by employees. 29 The company paid $400 cash for minor repairs to the company's computer. 30 The company paid $1,100 cash for this month's telephone bill. 30 The company paid $2,300 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. Two-thirds (or $161) of one month's insurance coverage has expired. b. At the end of the month, $800 of office supplies are still available. c. This month's depreciation on the computer equipment is $500. d. Employees earned $490 of unpaid and unrecorded salaries as of month-end. e. The company earned $1,650 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, 2018. 5b. Prepare the statement of retained earnings for the month of April 30, 2018. 5c. Prepare the balance sheet at April 30, 2018. 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

Part 1 &2: Credit Date General Journal Debit Apr 1 Cash 39000 Computer equipment 40000 Common stock 79000 Apr 2 Rent expense 2800 Cash 2800 Office supplies Apr 3 1100 cash 1100 Prepaid insuran ce Apr 10 2900 cash 2900 salaries expen se cash Apr 14 1500 1500 Apr 24 cash 12000 commission earned 12000 salaries expense Apr 28. 1500 cash 1500 Apr 29 Repairs expen se 400 cash 400 Apr 30. Telephone expense 1100 cash 1100 Apr 30. Dividends 2300 cash 2300

Part 3 ADVENTURE TRAVEL Unjusted Trial Balance April 30, 2018 No Account Title Debit Credit Cash 101 37400 Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated depreciation-Computer equipment Salaries payable 106 0 124 1100 128 2900 167 40000 168 0 209 0 Common stock 307 79000 Dividends 319 2300 Commissions earned Depreciation expense- Computer equipment Salaries expen se 405 12000 612 0 622 3000 637 Insurance expense 0 Rent expense 640 2800 Office supplies expense Repairs expense Telephone expense 650 0 684 400 1100 688 91000 91000 Total

Part 4 Transaction General Journal Insurance Expen se Prepaid Insuran ce Debit Credit 161 а 161 Office Supplies Expense Office Supplies b 300 300 (1100-800) Depreciation Exp-Computer Equipment Accum Depreciation-Computer Equip 500 500 Salaries Expense Salaries Payable d 490 490 Accounts Receivable Commissions Earned 1650 е 1650

Part 4 ADVENTURE TRAVEL Adjusted Trial Balance April 30, 2018 No Debit Credit Account Title Cash 101 37400 Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated depreciation-Computer equipment Salaries payable 106 1650 124 800 2739 128 167 40000 168 500 209 490 Common stock 307 79000 Dividends 319 2300 Commissions earned Depreciation expense- Computer equipment Salaries expen se 405 13650 612 500 622 3490 637 Insurance expense 161 Rent expense 2800 640 Office supplies expense Repairs expense Telephone expense 650 300 684 400 1100 688 9364093640 Total

Part 5a: ADVENTURE TRAVEL Income Statement For Month Ended April 30, 2018 Commissions earned Expenses Depreciation expense-Computer equipment Salaries expense 13650 500 3490 Insurance expense 161 Rent expense 2800 Office supplies expense 300 Repairs expense 400 Telephone expen se 1100 Total expense 8751 Net Income 4899 Part 5b ADVENTURE TRAVEL Statement of Retained earnings For Month Ended April 30, 2018 Retain ed earnings, April 1, 2018 Net Income Less: Dividends Retained earnings, April 30, 2018 0 4899 -2300 2599 2599

Part 5c ADVENTURE TRAVEL Balance Sheet April 30, 2018 Assets Cash 37400 Accounts receivable Office supplies Prepaid insurance Computer equipment Less Accumulated depreciation-Computer equipm Total assets 1650 800 2739 40000 500 39500 82089 Liabilities Salaries payable 490 Equity Common stock Retained earnings Total stockhold er equity Total liabilities and equity 79000 2599 81599 82089

Part 6a: General Journal Apr 30. Commissions earned Income summ ary Debit Credit Date 13650 13650 Apr 30. Income summary 8751 Depreciation expense-Computer equipment Salaries expense Insurance expense 500 3490 161 Rent expense 2800 Office supplies expense 300 Repairs expense Telephone expense 400 1100 Apr 30. Income summary 4899 Retained earnings 4899 Apr 30. Retained earnings Dividends 2300 2300

Part 6b: Ledget Accounts preciation expense-computer equipme Debit Credit Balance Repair expense Debit Credit Balance cash Computer equipment Debit Credit Balance 40000 Debit Credit Balance Date Date Date Date 40000 Apr 30.Adj Apr 30. close Apr 29. Apr 30. Close. Apr 1 Apr 2 400 39000 Apr 1 39000 500 500 400 400 2800 36200 500 0 0 mulated depreciation-Computer equip Debit Credit Balance 35100 Apr 3. 1100 Apr 10. Apr 14. Apr 24 Date salaries expense Telephone expense 32200 2900 Debit Credit Balance Credit Balance Apr 30. Adj. Date 30700 Debit 1500 500 500 Date Apr 14 Apr 28 Apr 30. Adj. Apr 30. Close. Apr 30. Apr 30. Close. 1100 12000 42700 1500 1500 1100 1500 41200 Salaries payable Debit Credit Balance Apr 28. 1500 3000 1100 0 Apr 29 Apr 30. Tel. Date 400 40800 490 3490 Apr 30. Adj 1100 39700 490 490 3490 0 Income summary Debit Credit Balance 13650 13650 Date Apr 30. WD 2300 37400 Apr 30. Rev Apr 30. Exp. Apr 30. Close Common stock Insurance expense Debit Credit Balance Debit Credit Balance 79000 79000 Date Date Account recievable 8751 4899 4899 Debit Credit Balance Apr 1 Apr 30. Adj Apr 30. Close. Date 161 161 0 Apr 30. Adj 1650 1650 161 0 Office supplies Dividends Rent expense Debit Credit Balance Debit Credit Balance 2800 Debit Credit Balance Date Date Date Apr 2. Apr 30. Close. Apr 3. 1100 2300 1100 Apr 30 2300 2800 2800 Apr 30. Adj. 300 800 0 Commission earned Debit Credit Balance Office supplies expense Prepaid insurance Date Debit Credit Balance Debit Credit Balance Apr 24 Apr 30. Adj Apr 30. close 13650 12000 12000 1650 13650 Date Date Apr 10 Apr 30. Adj. Apr 30. Close. 2900 2900 300 300 Apr 30. Adj. 161 2739 0 300 0 Sheet204 Sheet205 Sheet199 Sheet200 Sheet202 Sheet201 Sheet197 Sheet198 Sheet203 ENG 11:07 11/11/2019 UK

Part 7 ADVENTURE TRAVEL Post closing Trial balance April 30, 2018 Debit Credit No Account Title Cash Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated depreciation-Computer equipment Salaries payable Common stock Retained earnings Total 101 37400 106 1650 124 800 128 2739 40000 167 168 500 209 490 307 79000 318 2599 8258982589