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 $46,000 cash and computer equipment worth $40,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $2,400 cash for the first month's (April) rent. 3. The company purchased $1,200 of office supplies for cash. 10 The company paid $2,500 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 $12,000 cash for commissions revenue. 28 The company paid $1,000 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 $1,700 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 Revenue 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 $139 has expired this month. b. At the end of the month, $500 of office supplies are still available. c. This month's depreciation on the computer equipment is $500. d. Employees eamed $600 of unpaid and unrecorded salaries as of month-end e. The company earned $1,600 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 uneared 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. 6. Prepare journal entries to close the temporary accounts and then post to Requirement 6h

Answer 1

Credit Journals: Sl.no Date Account title 1 Apr.01 Cash Computer Equipment Common stock $ $ Debit 46,000 40,000 $ 86,000 2 $ 2,400 Apr.02 Rent Expense Cash $ 2,400 3 $ 1,200 Apr.03 Office Supplies Cash $ 1,200 $ 2,500 Apr.10 Prepaid Insurance Cash $ 2,500 5 $ 1,000 Apr.14 Salaries Expenses Cash $ 1,000 6 $ 12,000 Apr.24 Cash Commission Earned $ 12,000 7 $ 1,000 Apr.28 Salaries Expenses Cash $ 1,000 8 $ 350 Apr.29 Repairs Expense Cash $ 350 9 $ 750 Apr.30 Telephone Expense Cash $ 750 $ 1,700 10 Apr.30 Dividends Cash $ 1,700

Credit AA Adventure Travel Unadjusted Trial Balance For the months Ended April,30 Account Particulars Debit Cash $ 47,100 Accounts receivable Office Supplies $ 1,200 Prepaid Insurance $ 2,500 Computer Equipment $ 40,000 Accumulated Depreciation-Computer Equip. $ Salaries payable $ Common stock $ Retained Earnings $ Dividends $ 1,700 Commission Earned $ Depreciation Expense-Computer Equip. $ Salaries Expenses $ 2,000 Insurance Expense $ Rent Expense $ 2,400 Office supplies Expense $ Repairs Expenses $ 350 Telephone Expense $ 750 TOTAL $ 98,000 $ 86,000 $ 12,000 98,000 *Cash=[$46,000-2,400-1,200-2,500-1,000+12,00-350-750-1,700]=$47,100 *Salaries Expense=[$1000+1000] = $2,000

Credit Adjusting Journals: Sl.no Date Account title Mar 31 Insurance Expense Prepaid Insurance (To record Insurance expired) Debit $ 139 a $ 139 b $ 700 Mar 31 Office supplies Expense Office supplies (To record supplies used) [$1,200-500] $ 700 с $ 500 Mar 31 Depreciation Expense-Computer Equip. Accumulated Depreciation-Computer Equip. (To record depreciation expense) $ 500 d $ 600 Mar 31 Salaries Expense Salaries payable (To record accrued salaries) $ 600 CD $ 1,600 Mar.31 Accounts Receivable Commission Earned (To record commission earned revenue on account) $ 1,600

ACA Adventure Travel Adjusted Trial Balance For the months Ended April,30 Account Particulars Debit Credit Cash $ 47,100 Accounts receivable $ 1,600 Office Supplies $ 500 Prepaid Insurance $ 2,361 Computer Equipment $ 40,000 Accumulated Depreciation-Computer Equip. $ $ 500 Salaries payable $ $ 600 Common stock $ $ 86,000 Retained Earnings $ $ Dividends $ 1,700$ Commission Earned $ $ 13,600 Depreciation Expense-Computer Equip. $ 500 $ Salaries Expenses $ 2,600 $ Insurance Expense $ 139 $ Rent Expense $ 2,400 $ Office supplies Expense $ 700 $ Repairs Expenses $ 350 $ Telephone Expense $ 750 $ TOTAL $ 100,700 $ 100,700 lalu *Office Supplises=[$1,200-700]= $500 *Prepid Insurance=[$2,500-139]=$2,361 *Commisssion Earned=[$12,000+1,600]=$13,600 *Salaries Expense=[$2,000+600]=$2,600

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