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 $35,000 cash and computer equipment worth $25,000 in the company in exchange for common stock.
		2		The company rented furnished office space by paying $2,000 cash for the first month’s (April) rent.
		3		The company purchased $1,500 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 $1,100 cash for two weeks' salaries earned by employees.
		24		The company collected $16,000 cash for commissions earned.
		28		The company paid $1,100 cash for two weeks' salaries earned by employees.
		29		The company paid $400 cash for minor repairs to the company's computer.
		30		The company paid $1,550 cash for this month's telephone bill.
		30		The company paid $2,000 cash in dividends.

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
307	Common Stock	688	Telephone Expense
318	Retained Earnings	901	Income Summary
319	Dividends

Use the following information:

1. Prepaid insurance of $128 has expired this month.
2. At the end of the month, $800 of office supplies are still available.
3. This month’s depreciation on the computer equipment is $500.
4. Employees earned $440 of unpaid and unrecorded salaries as of month-end.
5. The company earned $2,200 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 retained earnings 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 b
Journalize the adjusting entries for the month, and then post to the ledger on Req 6B tab, using April 30 Adj. as the date. (Do not round intermediate calculations and round the final answers to nearest whole number.) View transaction list View journal entry worksheet X No Transaction General Journal Debit Credit 1 a. 128 Insurance expense Prepaid insurance 128 2 b. 700 Office supplies expense Office supplies 700 3 C. 500 Depreciation expense-Computer equip. Accumulated depreciation—Computer equip. 500 d. 440 Salaries expense Salaries payable 440 5 e. 2,200 Accounts receivable Commissions earned 2,200
alance.

Answer 1

Adventure Travel Journal Enteries Date Particulars 1.4.2017 Cash a/c Dr. Computer a/c Dr. To J.Nozomi, Capital (Capital Invested) Debit in $ Credit in $ 35000 25000 60000 Dr. 2000 2.4.2017 Rent Expense a/c To Cash (Rent paid in cash) 2000 Dr. 1500 3.4.2017 Office Supplies a/c To Cash (Office Supplies purchased n cash) 1500 2300 10.4.2017 Prepaid Insurance a/c Dr. To Cash (one year insurance paid in cash) 2300 Dr. 1100 14.4.2017 Salaries Expense a/c To Cash (Salary paid in cash) 1100 16000 24.4.2017 Cash a/c Dr. To Commission Earned (Commission earned on Flight tickets) 16000 Dr. 1100 28.4.2017 Salaries Expense a/c To Cash (Salary paid in cash) 1100 Dr. 400 29.4.2017 Repairs Expense a/c To Cash (Computer repairs in cash) 400 1550 30.4.2017 Telephone Expense a/c Dr. To Cash (Telephone Expense paid in cash) 1550 2000 30.4.2017 Dividends a/c Dr. To Cash (Cash drawn for personal use) 2000

Adjustment Enteries Date Particulars 30.4.2017 Insurance Expense a/c To Prepaid Insurance (Insurance expense charged) Dr. Debit in $ Credit in $ 128 128 Dr. 700 30.4.2017 Supplies Expense a/c To Supplies (Supplies Expensed) 1500 - 800 = = 700 700 500 30.4.2017 Depreciation Expense - Computer a/c Dr. To Accum. Depre - Computer (Depreciation charged to Computer) 500 Dr. 440 30.4.2017 Salaries Expense a/c To Salaries Payable (Salary expense accrued) 440 Dr. 2200 30.4.2017 Accounts Receivable a/c To Commission Earned (Commission revenue accrued) 2200 Closing Enteries Date Particulars Debit in $ Credit in $ 30.4.2017 Income Summary a/c Dr. 7918 To Rent Expense 2000 To Salaries Expense 2640 To Repairs Expense 400 To Telephone Expense 1550 To Insurance Expense 128 To Supplies Expense 700 To Depreciation Expense - Computer 500 (Expense accounts closed) Dr. 18200 30.4.2017 Commission Earned a/c To Income Summary (Revenue accounts Closed) 18200 Dr. 10282 30.4.2017 Income Summary a/c To Retained Earnings (Profits Transferred ) 10282 Dr. 2000 30.4.2017 Retained Earnings a/c To Dividends (Dividend account closed) 2000

Trial Balance For the month ending 30.4.2017 Unadjusted Adjustment Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 39050 39050 39050 2200 2200 2200 2300 128 2172 2172 1500 700 800 800 25000 25000 25000 500 500 500 440 440 440 60000 60000 60000 8282 Acct.No. Particulars 101 Cash 106 Accounts Receivable 128 Prepaid Insurance 124 Office Supplies 167 Computer 168 Accum. Depre - Computer 209 Salaries Payable 307 Common Stock 318 Retained Earnings 319 Dividends 405 Commission Earned 640 Rent Expense 622 Salaries Expense 684 Repairs Expense 688 Telephone Expense 637 Insurance Expense 650 Office Supplies Expense 612 Depreciation Expense - Computer Totals 2000 2000 16000 2200 18200 2000 2000 2200 440 2640 400 400 1550 1550 128 128 700 700 500 500 76000 76000 3968 3968 79140 79140 69222 69222

Amounts in $ Amounts in $ Balance sheet As at 30.4.2017 Assets Current Assets Cash Accounts Receivable Prepaid Insurance Office Supplies Amounts in $ Amounts in $ Liabilities Current Liabilities 39050 Salaries Payable 2200 440 2172 800 44222 25000 60000 Non Current Assets Computer Accum. Depre - Computer Total Assets Shareholders Equity Common Stock 24500 Retained Earnings 68722 Total Liabilities & equity -500 8282 68282 68722 18200 2000 2640 Statement of Income For the month ending 30.4.2017 Commission Earned Less: Rent Expense Salaries Expense Repairs Expense Telephone Expense Insurance Expense Supplies Expense Depreciation Expense - Cor Net Income 400 1550 128 700 500 7918 10282 Statement of Retained Earnings For the month ending 30.4.2017 Beginning Balance Net Income Dividends 0 10282 -2000 8282

2000 Common Stock Commission Earned 1500 Salaries Expense Cash 1100 Cash 1100 Salaries Payable 440 Income Summary 2640 2300 1100 Cash 35000 Rent Expense 16000 Office Supplies Prepaid Insurance Salaries Expense Salaries Expense Repaires Expense Telephone Expense Dividends Bal. 51000 2640 1100 2640 400 1550 2000 39050 Salaries Payable Salaries Expense 440 440 Bal. 51000 440 440 Accounts Receivable 2200 Commission Earned Cash Repairs Expense 400 Income Summary 400 400 Bal. 2200 400 2200 2200 Cash Telephone Expense 1550) Income Summary 1550 Prepaid Insurance 2300 Insurance Expense Bal. Cash 128 1550 2172 1550 2300 2300 Insurance Expense Prepaid Insuranc 128 Income Summary 128 Office Supplies 1500 Supplies Expense Bal. Cash 700 128 800 128 1500 1500

Computer 25000 Office Supplies Supplies Expense 700 Income Summary 700 J.Nozomi, Capital 700 700 Bal. 25000 25000 25000 Accum. Depre- Accum. Depre - Computer Depreciation Expense- 500 Depreciation Expense - Computer 500 Income Summary 500 500 500 Bal. 500 500 500 Retained Earnings 2000 Income Summary Dividends 10282 Common Stock Cash 35000 Bal. 8282 10282 Bal. 10282 35000 35000 35000 Cash 0 Dividends 2000 Retained Earnings 2000 2000 2000 Commission Earned Cash 18200 Accounts Receivable 18200 Income Summary 16000 2200 18200 Cash Rent Expense 400 Income Summary 400 400 400