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 $39,000 cash and computer equipment worth $35,000 in the company. 2 The company rented furnished office space by paying $2,300 cash for the first month's (April) rent. 3 The company purchased $1,000 of office supplies for cash. 10 The company paid $2,200 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 $10,000 cash for commissions earned. 28 The company paid $1,500 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 $1,100 cash for this month's telephone bill. 30 Nozomi withdrew $2,100 cash from the company for personal use. 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 301 J. Nozomi, Capital 302 J. Nozomi, Withdrawals 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 $122 has expired this month. b. At the end of the month, $400 of office supplies are still available. c. This month's depreciation on the computer equipment is $500. d. Employees earned $520 of unpaid and unrecorded salaries as of month-end. e. The company earned $2,000 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 owner's equity 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 Account Title & Explanation Debit Credit 1-Apr Cash Computer Equipment J.Nozomi , Capital 39,000 35,000 74,000 2-Apr Rent expense Cash 2,300 2,300 1,000 3-Apr Office Supplies Cash 1,000 10-Apr Prepaid Insurance Cash 2,200 2,200 14-Apr Salaries expense Cash 1,500 1,500 10,000 24-Apr Cash Commission earned 10,000 84 1,500 85 86 28-Apr Salaries expense Cash 1,500

500 29-Apr Repairs expense Cash 500 30-Apr Telephone expense Cash 1,100 1,100 @ 8 ཚ༠% * a * 2.100 30-Apr J.Nozomi Withdrawls Cash 95 2,100 96

179 General Ledger Accounts 180 181 Cash 182 Date Debit Credit Balance Accounts Receivable Date Debit April 30 Adj. Credit Balance 2,000 183 1-Apr 39,000 2,000 184 185 186 2,300 1,000 2,200 1,500 187 39,000 36,700 35,700 33,500 32,000 42,000 40,500 40,000 38,900 36,800 2-Apr 3-Apr 10-Apr 14-Apr 24-Apr 28-Apr 29-Apr 30-Apr 30-Apr 188 10,000 189 190 1,500 500 1,100 2,100 192 Office Supplies Debit Prepaid Insurance Debit Credit Credit 1,000 195 Date 196 3-Apr 197 April 30 Adj. 198 Balance 1,000 400 Date 10-Apr April 30 Adj. 2,200 Balance 2,200 2,078 600 122 199 200 Computer Equipment Debit 201 Credit Date 1-Apr Balance 35,000 Accumulated Depreciation - Computer Equipment Date Debit Credit April 30 Adj. 500 Balance 500 35,000 202 203

206 Salaries Payable Debit Credit Debit 207 Date 208 April 30 Adj. 209 Balance 520 520 J.Nozomi , Capital Date 1-Apr April 30 Close April 30 Clos Credit 74,000 3,358 Balance 74,000 77,358 75,258 210 2,100 211 Credit J.Nozomi , Withdrawls Date Debit 30-Apr April 30 Close Balance 2,100 2,100 2,100 Commissions earned Debit Credit Credit 10,000 2,000 Balance 10,000 12,000 Depreciation expense - Computer Equipment Date Debit April 30 Adj. 500 April 30 Close Balance 500 500 215 216 217 218 219 Date 220 24-Apr 221 April 30 Adj. 222 April 30 Close 223 224 Date 226 14-Apr 227 28-Apr 228 April 30 Adj. 229 April 30 Close 12,000 225 Salaries expense Debit Insurance expense Debit Credit Balance Credit Balance 122 Date April 30 Adj. April 30 Close 1,500 1,500 520 122 1,500 3,000 122 3,520 3,520

Rent expense Debit Credit Credit Balance 2,300 0 Office Supplies expense Date Debit April 30 Adj. April 30 Close Balance 600 2,300 600 2,300 600 230 231 Date 232 2-Apr 233 April 30 Close 234 235 236 237 Date 238 29-Apr 239 April 30 Close 240 241 Repairs expense Debit Credit Balance Date Credit Telephone expense Debit 30-Apr April 30 Close Balance 1,100 500 500 1,100 500 1,100 242 Income Summary Debit Credit 12,000 243 Date 244 April 30 Close 245 April 30 Close 246 April 30 Close 247 Balance 12,000 3,358 8,642 3,358

Credit Credit Debit 36,800 1,000 2,200 35,000 0 Adventure Travel Unadjusted Trial Balance For the month ended April 30 Particulars Cash Accounts Receivable Office Supplies Prepaid Insurance Computer Equipment Accumulated Depreciation - Computer Equipment Salaries Payable J.Nozomi Capital J.Nozomi , Withdrawls Commissions earned Depreciation Expense - Computer Equipment Salaries Expense Insurance Expense Rent Expense Office Supplies Expense Repairs Expense Telephone Expense Total Adventure Travel Adjusted Trial Balance For the month ended April 30 Particulars Debit Cash 36,800 Accounts Receivable 2,000 Office Supplies 400 Prepaid Insurance 2,078 Computer Equipment 35,000 Accumulated Depreciation - Computer Equipment Salaries Payable J.Nozomi Capital J.Nozomi , Withdrawls 2,100 Commissions earned Depreciation Expense - Computer Equipment 500 Salaries Expense 3,520 Insurance Expense 122 Rent Expense 2,300 Office Supplies Expense 600 Repairs Expense 500 Telephone Expense 1,100 87020 500 520 74,000 74,000 2,100 10,000 12,000 3,000 2,300 500 1,100 84000 84000 Total 87020

97 Adjusting Entries 98 99 122 30-Apr Insurance expense Prepaid Insurance 100 122 600 30-Apr Office Supplies expense Office supplies 103 600 104 105 500 30-Apr Depreciation Expense-Computer Equipment Accumulated depreciation-Computer Equipment 106 500 108 520 30-Apr Salaries expense Salaries Payable 520 111 2,000 30-Apr Accounts Receivable Commission Earned 112 2,000 113

115 116 118 12,000 119 SSSSS Adventure Travel Income Statement For the month ended April 30 Revenues Commissions earned Less Expenses Depreciation Expense - Computer Equipment Salaries Expense Insurance Expense Rent Expense Office Supplies Expense Repairs Expense Telephone Expense Total Expenses Net Income 500 3,520 122 2,300 600 500 1,100 226 8,642 3,358 129

130 131 132 Adventure Travel Statement of Owner's Equity For the month ended April 30 J.Nozomi , Capital, April 1 Add Net Income Less J.Nozomi , Withdrawls 133 74,000 3,358 (2,100) 135 136 137 1,258 75,258 J.Nozomi , Capital, April 30 140 142 144 Adventure Travel Balance Sheet April 30 Assets Cash Accounts Receivable Office Supplies Prepaid Insurance Computer Equipment Accumulated Depreciation - Computer Equipment Total Assets 145 36,800 2,000 400 2,078 146 35,000 500 148 149 34500 75778 150

Liabilities & Equity Salaries Payable 520 Equity J.Nozomi , Capital Total Liabilities & Equity 75,258 75,778 155 Closing Entries 158 159 Date Particulars Debit Credit 160 12.000 30-Apr Comission Earned Income Summary 162 12,000 163 8,642 164 165 167 30-Apr Income Summary Depreciation expense Salaries expense Insurance expense Rent expense Office Supplies expense Repairs expense Telephone expense 500 3,520 122 2,300 600 500 1,100 169 170 171

3,358 30-Apr Income Summary J.Nozomi , Capital 3,358 173 174 175 176 177 178 2,100 30-Apr J.Nozomi , Capital J.Nozomi Withdrawls 2,100

249 251 Credit 252 Adventure Travel Post Closing Trial Balance For the month ended April 30 Particulars Cash Accounts Receivable Office Supplies Prepaid Insurance Computer Equipment Accumulated Depreciation - Computer Equipment Salaries Payable J.Nozomi , Capital Total Debit 36,800 2,000 400 2,078 35,000 256 500 520 75,258 76,278 259 260 76,278 261