Question

On April 1, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month.

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 $25,000 in the company in exchange for common stock.


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


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


10
The company paid $2,200 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 $16,500 cash for commissions earned.


28
The company paid $1,100 cash for two weeks' salaries earned by employees.


29
The company paid $550 cash for minor repairs to the company's computer.


30
The company paid $800 cash for this month's telephone bill.


30
The company paid $2,000 cash in dividends.

 

The company's chart of accounts follows:

 


101Cash405Commissions Earned
106Accounts Receivable612Depreciation Expense—Computer Equip.
124Office Supplies622Salaries Expense
128Prepaid Insurance637Insurance Expense
167Computer Equipment640Rent Expense
168Accumulated Depreciation—Computer Equip.650Office Supplies Expense
209Salaries Payable684Repairs Expense
307Common Stock688Telephone Expense
318Retained Earnings901Income Summary
319Dividends


 

Use the following information:

  1. Prepaid insurance of $122 has expired this month.

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

  3. This month’s depreciation on the computer equipment is $500.

  4. Employees earned $310 of unpaid and unrecorded salaries as of month-end.

  5. The company earned $2,150 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 balance.

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Answer #1
DateAccount Titles and ExplanationDebit $Credit $
2013


Apr-01Cash Accounts              30,000

Computer equipment              20,000

Common stock
                   50,000

(To be record cash and asset investment in the business as common stock)




Apr-02Rent Expenses                1,800

Cash Account
                      1,800

(To be record payment of rent)
                             -  




Apr-03Office Supplies                1,000

Cash Account
                      1,000

(To be record purchase of office supplies)





Apr-10Prepaid Insurance                2,400

Cash Account
                      2,400

(To be record prepaid insurance prepium payment)





Apr-14Salaries and Wages Expenses                1,600

Cash Account
                      1,600

(To be record payment of staff salary)





Apr-24Cash Account                8,000

Commission income
                      8,000




Apr-28Salaries and Wages Expenses                1,600

Cash Account
                      1,600

(To be record payment of staff salary)





Apr-29Computer's Repaires and maintenance                    350

Cash Account
                         350

(To be record expenses of repaires and maintenance)





Apr-30Telephone Expenses                    750

Cash Account
                         750

(To be record payment of telephone expenses)





Apr-30Dividends                1,500

Cash Account
                      1,500

(To be record payment of dividends)


answered by: ANURANJAN SARSAM
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