Ans.1. The journal entries are as follows:
Journal entries in the books of Adventure Travel |
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Date |
Particulars |
Debit amount |
Credit amount |
1-Apr |
Cash |
$31,000 |
|
Computer Equipment |
$40,000 |
||
Common Stock |
$71,000 |
||
(Being capital invested in the form of cash and computer equipment) |
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2-Apr |
Rent expense |
$3,000 |
|
Cash |
$3,000 |
||
(Being office rent for April paid in cash) |
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3-Apr |
Office Supplies |
$1,300 |
|
Cash |
$1,300 |
||
(Being office supplies purchased in cash) |
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10-Apr |
Prepaid insurance |
$2,000 |
|
Cash |
$2,000 |
||
(Being prepaid insurance paid in cash) |
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14-Apr |
Salaries expense |
$1,300 |
|
Cash |
$1,300 |
||
(Being salaries paid in cash) |
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24-Apr |
Cash |
$13,500 |
|
Commission Earned |
$13,500 |
||
(Being commission earned in cash) |
|||
28-Apr |
Salaries expense |
$1,300 |
|
Cash |
$1,300 |
||
(Being salaries paid in cash) |
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29-Apr |
Repairs expense |
$500 |
|
Cash |
$500 |
||
(Being repairs expense paid in cash) |
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30-Apr |
Telephone expense |
$1,450 |
|
Cash |
$1,450 |
||
(Being telephone expense for April paid in cash) |
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30-Apr |
Dividends |
$2,000 |
|
Cash |
$2,000 |
||
(Being dividends paid in cash) |
Ans.2. The ledger accounts will appear as follows:
Cash A/c |
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Date |
Particulars |
Debit Amount |
Date |
Particulars |
Credit Amount |
1-Apr |
Common Stock |
$31,000 |
2-Apr |
Rent expense |
$3,000 |
24-Apr |
Commission Earned |
$13,500 |
3-Apr |
Office Supplies |
$1,300 |
10-Apr |
Prepaid insurance |
$2,000 |
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14-Apr |
Salaries expense |
$1,300 |
|||
28-Apr |
Salaries expense |
$1,300 |
|||
29-Apr |
Repairs expense |
$500 |
|||
30-Apr |
Telephone expense |
$1,450 |
|||
30-Apr |
Dividends |
$2,000 |
|||
30-Apr |
Balance c/d |
$31,650 |
|||
$44,500 |
$44,500 |
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Computer Equipment A/c |
|||||
Date |
Particulars |
Debit Amount |
Date |
Particulars |
Credit Amount |
1-Apr |
Common Stock |
$40,000 |
30-Apr |
Balance c/d |
$40,000 |
$40,000 |
$40,000 |
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Common Stock A/c |
|||||
Date |
Particulars |
Debit Amount |
Date |
Particulars |
Credit Amount |
30-Apr |
Balance c/d |
$71,000 |
1-Apr |
Cash |
$31,000 |
1-Apr |
Computer Equipment |
$40,000 |
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$71,000 |
$71,000 |
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Rent Expense A/c |
|||||
Date |
Particulars |
Debit Amount |
Date |
Particulars |
Credit Amount |
2-Apr |
Cash |
$3,000 |
30-Apr |
Balance c/d |
$3,000 |
$3,000 |
$3,000 |
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Office Supplies A/c |
|||||
Date |
Particulars |
Debit Amount |
Date |
Particulars |
Credit Amount |
3-Apr |
Cash |
$1,300 |
30-Apr |
Balance c/d |
$1,300 |
$1,300 |
$1,300 |
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Prepaid insurance A/c |
|||||
Date |
Particulars |
Debit Amount |
Date |
Particulars |
Credit Amount |
10-Apr |
Cash |
$2,000 |
30-Apr |
Balance c/d |
$2,000 |
$2,000 |
$2,000 |
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Salaries expense A/c |
|||||
Date |
Particulars |
Debit Amount |
Date |
Particulars |
Credit Amount |
14-Apr |
Cash |
$1,300 |
30-Apr |
Balance c/d |
$2,600 |
28-Apr |
Cash |
$1,300 |
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$2,600 |
$2,600 |
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Commission Earned A/c |
|||||
Date |
Particulars |
Debit Amount |
Date |
Particulars |
Credit Amount |
30-Apr |
Balance c/d |
$13,500 |
24-Apr |
Cash |
$13,500 |
$13,500 |
$13,500 |
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Repairs expense A/c |
|||||
Date |
Particulars |
Debit Amount |
Date |
Particulars |
Credit Amount |
29-Apr |
Cash |
$500 |
30-Apr |
Balance c/d |
$500 |
$500 |
$500 |
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Telephone expense A/c |
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Date |
Particulars |
Debit Amount |
Date |
Particulars |
Credit Amount |
30-Apr |
Cash |
$1,450 |
30-Apr |
Balance c/d |
$1,450 |
$1,450 |
$1,450 |
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Dividends A/c |
|||||
Date |
Particulars |
Debit Amount |
Date |
Particulars |
Credit Amount |
30-Apr |
Cash |
$2,000 |
30-Apr |
Balance c/d |
$2,000 |
$2,000 |
$2,000 |
Ans.3. The unadjusted trial balance as on April 30 will be:
Unadjusted Trial Balance as of April 30 |
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Particulars |
Debit Amount |
Credit Amount |
Cash |
$31,650 |
|
Computer Equipment |
$40,000 |
|
Common Stock |
$71,000 |
|
Rent expense |
$3,000 |
|
Office Supplies |
$1,300 |
|
Prepaid insuarnce |
$2,000 |
|
Salaries expense |
$2,600 |
|
Commission earned |
$13,500 |
|
Repairs expense |
$500 |
|
Telephone expense |
$1,450 |
|
Dividends |
$2,000 |
|
Total |
$84,500 |
$84,500 |
Ans.4.
Adjusting journal entries |
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S.No. |
Particulars |
Debit amount |
Credit amount |
a. |
Insurance expense |
$111 |
|
Prepaid insurance |
$111 |
||
(Being prepaid insurance of $111 expired) |
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b. |
Office Supplies expense |
$600 |
|
Office Supplies |
$600 |
||
(Being $600 of office supplies consumed) |
|||
c. |
Depreciation expense - Computer Equip. |
$500 |
|
Accumulated Depreciation - Computer Equip. |
$500 |
||
(Being April's depreciation on computer equipment) |
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d. |
Salaries expense |
$580 |
|
Salaries payable |
$580 |
||
(Being accrued salaries for April) |
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e. |
Accounts receivable |
$1700 |
|
Commission earned |
$1700 |
||
(Being commission earned but not yet recorded) |
Working note:
For entry no. B, office supplies purchased were $1,300 and ending balance was $700. So, supplies consumed = $1,300 - $700 = $600.
The adjusted trial balance based on adjustment entries will be as follows:
Adjusted Trial Balance as of April 30 |
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Particulars |
Debit Amount |
Credit Amount |
Cash |
$31,650 |
|
Computer Equipment |
$40,000 |
|
Common Stock |
$71,000 |
|
Rent expense |
$3,000 |
|
Office Supplies |
$700 |
|
Prepaid insuarnce |
$2,000 |
|
Salaries expense |
$3,180 |
|
Commission earned |
$15,200 |
|
Repairs expense |
$500 |
|
Telephone expense |
$1,450 |
|
Dividends |
$2,000 |
|
Office Supplies expense |
$600 |
|
Depreciation expense - Computer equip. |
$500 |
|
Accumulated depreciation - Computer equip. |
$500 |
|
Salaries payable |
$580 |
|
Accounts receivable |
$1,700 |
|
Total |
$87,280 |
$87,280 |
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