Question

Required information (The following information applies to the questions displayed below] On April 1, 2015, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company's first month April 1 Nozomi invested $34,000 cash and computer equipment worth $20,000 in the company in exchange for common stock 2 The company rented furnished office space by paying $2,900 cash for the first month's (April) rent. 3 The company purchased $1,600 of office supplies for cash. 10 The company paid $3,000 cash for the premium on a 12-month insurance policy. Coverage begins on April 11 14 The company paid $1,300 cash for two weeks' salaries earned by employees. 24 The company collected $11,000 cash on commissions from airlines on tickets obtained for customers. 28 The company paid $1,300 cash for two weeks' salaries earned by employees. 29 The company paid $250 cash for minor repairs to the company's computer 30 The company paid $1,150 cash for this month's telephone bill. 30 The company paid $1,800 cash in dividends.

Answer 1

Solution

Adventure Travel

Journal Entries:

Date	Account Titles and Explanation	Ref. No.	Debit	Credit
30-Apr	Commissions Revenue		$11,000
	Income Summary			$11,000
	(to close commissions revenue account to income summary)
30-Apr	Income Summary		$7,150
	Rent Expense			$2,900
	Salaries Expense			$2,600
	Insurance Expense			$250
	Repairs Expense			$250
	Telephone Expense			$1,150
	(To close expenses accounts to income summary account)
30-Apr	Income Summary		$3,850
	Retained Earnings			$3,850
	(To close income summary account)
30-Apr	Retained Earnings		$1,800
	Dividends			$1,800
	(To close the dividends account)

Workings:

Expenses –

Rent expense $2,900

Insurance expense = $250       (3,000 x 1/12 = $250)

Salaries expense = $1,300 + $1,300 = $2,600

Repairs expense = $250

Telephone bill = $1,150

Revenues –

Commissions revenue = $11,000