Question

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

April		1		Nozomi invested $44,000 cash and computer equipment worth $25,000 in the company.
		2		The company rented furnished office space by paying $2,400 cash for the first month’s (April) rent.
		3		The company purchased $1,300 of office supplies for cash.
		10		The company paid $2,300 cash for the premium on a 12-month insurance policy. Coverage begins on April 11.
		14		The company paid $1,000 cash for two weeks' salaries earned by employees.
		24		The company collected $8,500 cash for commissions earned.
		28		The company paid $1,000 cash for two weeks' salaries earned by employees.
		29		The company paid $500 cash for minor repairs to the company's computer.
		30		The company paid $1,250 cash for this month's telephone bill.
		30		Nozomi withdrew $1,500 cash from the company for personal use.

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
301	J. Nozomi, Capital	688	Telephone Expense
302	J. Nozomi, Withdrawals	901	Income Summary

Use the following information:

1. Prepaid insurance of $128 has expired this month.
2. At the end of the month, $600 of office supplies are still available.
3. This month’s depreciation on the computer equipment is $500.
4. Employees earned $360 of unpaid and unrecorded salaries as of month-end.
5. The company earned $1,900 of commissions that are not yet billed at month-end.

ADVENTURE TRAVEL Balance Sheet April 30 Assets Cash Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated depreciation—Computer equip. Total assets Liabilities $ Salaries payable Equity J. Nozomi, Capital Total liabilities and equity $ 0 Debit Credit ADVENTURE TRAVEL Adjusted Trial Balance April 30 Account Title 101: Cash 106: Accounts receivable 124: Office supplies 128: Prepaid insurance 167: Computer equipment 168: Accumulated depreciation—Computer equipment 209: Salaries payable 301: J. Nozomi, Capital 302: J. Nozomi, Withdrawals 405: Commissions earned 612: Depreciation expense-Computer equipment 622: Salaries expense ſ 637: Insurance expense ſ 640: Rent expense 650: Office supplies expense 684: Repairs expense 688: Telephone expense Total $ 0 $ 0

Answer 1

Adventure Travel Journal Enteries Debit in $ Credit in $ Particulars Date 1.4.2017 Cash a/c 44000 Dr. Computer a/c 25000 Dr. To J.Nozomi , Capital 69000 (Common Stock issued for Cash) Rent Expense a/c 2.4.2017 Dr. 2400 To Cash 2400 |(Rent paid in cash) Office Supplies a/c 3.4.2017 Dr. 1300 To Cash 1300 (Office Supplies purchased n cash) 10.4.2017 Prepaid Insurance a/c Dr. 2300 To Cash 2300 (one year insurance paid in cash) 14.4.2017 Salaries Expense a/c 1000 Dr. To Cash 1000 |(Salary paid in cash) 24.4.2017 Cash a/c Dr. 8500 To Commission Earned 8500 (Commission earned on Flight tickets) 28.4.2017 Salaries Expense a/c Dr. 1000 To Cash 1000 (Salary paid in cash) 29.4.2017 Repaires Expense a/c To Cash Dr. 500 500 (Computer repairs in cash) 30.4.2017 Telephone Expense a/c 1250 Dr. To Cash 1250 (Telephone Expense paid in cash) 30.4.2017 J.Nozomi , Withdrawals a/c Dr. 1500 To Cash 1500 (Dividends paid in cash)

Adjustment Enteries Debit in $ Credit in $ Particulars Date 30.4.2017 Insurance Expense a/c Dr. 128 To Prepaid Insurance 128 |(Insurance expense charged) 30.4.2017 Supplies Expense a/c To Supplies Dr. 700 700 (Supplies Expensed) 1300 - 600 = 700 30.4.2017 Depreciation Expense - Computer a/c Dr. 500 To Accum. Depre - Computer 500 (Depreciation charged to Computer) 30.4.2017 Salaries Expense a/c Dr. 360 To Salaries Payable |(Salary expense accrued) 360 30.4.2017 Accounts Receivable a/c To Commission Earned Dr. 1900 1900 (Commission revenue accrued) Closing Enteries Debit in $ Credit in $ Particulars Date 30.4.2017 Income Summary a/c Dr. 7838 To Rent Expense 2400 To Salaries Expense 2360 To Repairs Expense 500 To Telephone Expense 1250 To Insurance Expense 128 To Supplies Expense 700 500 To Depreciation Expense - Computer (Expense accounts closed) 30.4.2017 Commission Earned a/c Dr. 10400 To Income Summary 10400 (Revenue accounts Closed) 30.4.2017 Income Summary a/c To J.Nozomi , Capital Dr. 2562 2562 (Profits Transferred to Capital ) 30.4.2017 J.Nozomi , Capital a/c Dr. 1500 To J.Nozomi , Withdrawals (Withdrawals charged to Capital) 1500

Trial Balance For the month ending 30.4.2017 Post Closing Unadjusted Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Adjustment Adjusted Particulars Cash 41250 41250 41250 Accounts Receivable 1900 1900 1900 Prepaid Insurance Office Supplies 2300 128 2172 2172 1300 700 600 600 Computer 25000 25000 25000 Accum. Depre - Computer 500 500 500 Salaries Payable 360 360 360 J.Nozomi , Capital 69000 69000 70062 J.Nozomi, Withdrawals 1500 1500 8500 1900 10400 Commission Earned 2400 Rent Expense Salaries Expense 2400 2000 360 2360 Repairs Expense 500 500 Telephone Expense 1250 1250 Insurance Expense 128 128 Supplies Expense 700 700 Depreciation Expense - Computer 500 500 Totals 77500 3588 80260 80260 70922 77500 3588 70922

Statement of Income For the month ending 30.4.2017 Commission Earned 10400 Less: Rent Expense 2400 Salaries Expense 2360 Repairs Expense 500 Telephone Expense 1250 Insurance Expense 128 Supplies Expense 700 7838 Depreciation Expense - Computer 500 Net Income 2562 Statement of Owner's equity For the month ending 30.4.2017 J.Nozomi , Capital 69000 Net Income 2562 71562 Less:J.Nozomi , Withdrawals -1500 70062

Balance sheet As at .. Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Assets Current Liabilities Current Assets Salaries Payable Cash 360 41250 Accounts Receivable 1900 Prepaid Insurance Office Supplies 2172 600 45922 Owners Equity Non Current Assets J.Nozomi , Capital Computer 25000 70062 Accum. Depre - Computer -500 24500 70422 Total Liabilities & equity Total Assets 70422