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 $30,000 cash and computer equipment worth $20,000 in the company.

 2 The company rented furnished office space by paying $1,800 cash for the first month's (April) rent.

 3 The company purchased $1,000 of office supplies for cash.

 10 The company paid $2,400 cash for the premium on a 12-month insurance policy. Coverage begins on April 11.

 14 The company paid $1,600 cash for two weeks' salaries earned by employees.

 24 The company collected $8,000 cash for commissions earned.

 28 The company paid $1,600 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 Nozomi withdrew $1,500 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 3. Nozoni, Capital 302 3. 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 $133 has expired this month.

 b. At the end of the month $600 of office supplies are still available 

 c. This month's depreciation on the computer equipment is $500.

 d. Employees earned $420 of unpaid and unrecorded salaries as of month-end.

 e. The company earned $1,750 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 66. 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. Complete this question by entering your answers in the tabs below. 

Answer 1

Solution ;

1.                Journal enteries

Date	Particulars	L.F	Debit	Credit
April 01	Cash a/c		30000
	Computer equipment a/c		20000
	To J.Nozomi capital			50000
April 02	Rent expense a/c		1800
	To Cash			1800
April 03	Office suppliers a/c		1000
	To Cash			1000
April 10	Prepaid insurance		2400
	To Cash			2400
April 14	Salaries a/c		1600
	To Cash			1600
April 24	Cash a/c		8000
	To Commission earned			8000
April 28	Salaries a/c		1600
	To Cash			1600
April 29	Repaire expense a/c		350
	To Cash			350
April 30	Telephone expense a/c		750
	To Cash			750
April 30	Drawing a/c		1500
	To Cash			1500

2. Ledger a/c

                                      CASH a/c

Date      Particular             Amount       Date        Particular        Amount

April 1     J.Nozomi capital    30000       April 2      Rent a/c        1800

April 24    Commission earned     8000      April 3     Office suppliers    1000

                                                          April 10    Prepaid insurance     2400

                                                              April 14    Salaries                   1600

                                                              April 28    Salaries                     1600

                                                              April 29    Repaire expense         350

            April 30    Telephone expense     750

                                                               April 30     Drawings                   1500

                                                                              Balance c/d               27000

                                                  38000                                                    38000

                                                Accounts receivable a/c

Dr                                                                            Cr

Date      Particulars          Amount       Date       Particular      Amount

April 30   Commission       1750

                                                                      Balance c/d      1750

                                         1750                                               1750

                                       Office suppliers a/c

Date         Particular      Amount     Date    Particular      Amount

April 3      Cash            1000          April 30    Office supplier expense    400

                                                                    Balance c/d    600

                                   1000                                                  1000

                                 Computer equipment a/c

Date      Particular     Amount      Date      Particular       Amount

April 1      Cash          20000

                                                             Balance c/d      20000

                                   20000                                         20000

                              Salaries payable a/c

Date       Particular     Amount       Date      Particular    Amount

                                               April 30      Salaries 420

Balance c/d 420

420    420

   Drawings a/c

Date    Particular    Amount    Date Particular Amount

April 30    Cash    1500

   Balance c/d    1500

   1500    1500

Depreciation expense

Date Particular Amount    Date    Particular    Amount

April 30    Accumulated depreciation         500

                                                                                        Balance c/d     500

                                                                500                                           500

                                         Insurance expense

Date Particular Amount    Date Particular Amount

April 30   Prepaid insurance      133

                                                                              Balance c/d    133

                                               133                                                 133

                                            Office suppliers expense

Date      Particular            Amount       Date      Particular      Amount

April 30    Office suppliers    400

                                                                     Balance c/d    400

                                             400                                                400

                                    Telephone expense

Date       Particular         Amount      Date      Particular       Amount

April 30   Cash                750

                                                                    Balance c/d     750

                                         750                                              750

                                          Prepaid insurance

Date          Particular        Amount      Date      Particular     Amount

April 30       Cash              2400         April 30    Insurance     133

                                                                       Balance c/d   2267

                                        2400                                              2400

                                         Accumulated depreciation

Date       Particular       Amount      Date     Particular      Amount

                                                   April 30   Depreciation   500

               Balance c/d       500

                                        500                                             500

                                           J.Nozomi capital

Date    Particular        Amount      Date    Particular    Amount

April 30       Drawings              1500       April 1    Cash            30000

                   Balance cld 50697 April 1    Equipment     20000

                                                                April 30   Income statement 2197

                                                   52197                                                  52197

                                              Commission earned

Date       Particular        Amount      Date        Particular    Amount

                                                     April 24     Cash           8000

            Balance c/d 9750        April 30     Accounts receivable    1750

                                      9750                                                             9750

                                           Salaries a/c

Date       Particular         Amount       Date      Particular   Amount

April 14    Cash          1600

April 28    Cash               1600

April 30    Salaries payable      420                      Balance c/d    3620

                                             3620                                          3620

                                               Rent expense a/c

Date      Particular          Amount       Date        Particular     Amount

April 2      Cash            1800

                                                                     Balance c/d      1800

                                     1800                                                 1800

                                    Repairs expense

Date      Particular       Amount      Date      Particular      Amount

April 29   Cash        350

                                                                  Balance c/d    350

                                    350                                               350

                                    Income summary

Date   Particular    Amount     Date      Particular    Amount

April 30 Expense    7553        April 30     Commission earned     9750

April 30 Balance c/d 2197    

   9750    9750

3.    Adventure travel

Unadjusted trial balance    

      

      

Cash	27000
Accounts receivable	0
Office suppliers	1000
Prepaid insurance	2400
Computer equipments	20000
Accumulated depreciation		0
Salaries payable		0
Drawings	1500
Commission earned		8000
Depreciation expense	0
Salaries	3200
Insurance expense	0
Rent expense	1800
Office suppliers	0
Repairs expense	350
Telephone expense	750
	58000	58000

4.    Adjusting Journal entries

	Particulars	Debit	Credit
a	Insurance expense a/c	133
	To Prepaid insurance		133
b	Office supplier expense	400
	To Office supplier		400
c	Depreciation expense	500
	To Accumulated depreciation		500
d	Salaries a/c	420
	To Salaries payable		420
e	Accounts receivable	1750
	To Commission earned		1750