Question

On April 1, 2017, 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 $35,000 in the company in exchange for common stock

2 The company rented furnished office space by paying $1,500 cash for the first month's (April) rent

3 The company purchased $1,100 of office

10 The company paid $2,800 cash for the premium on a 12-month insurance policy. Coverage begins or

14 The company paid $1,100 cash for two weeks' salaries earned by

24 The company collected $20,000 cash on commissions from airlines on tickets obtained for customers.

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

29 The company paid $500 cas

30 The company paid $1,050 cash for this month's telephone bill.

30 The company paid $2,500 cash in dividends.

supplies for cash.

April 11.

employees.

for minor repairs to the company's computer.

The company's chart of accounts follows:

405 Commissions Eaned

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

C as

Accounts Receivable

1

11

106

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

Use the following information:

a. Two-thirds (or $156) of one month's insurance coverage has expired.

b. At the end of the month, $700 of office supplies are still available

C. This month's depreciation on the computer equipment is $400.

d. Employees earned $570 of unpaid and unrecorded salaries as of month-end.

e. The company earned $2,000 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 and post the adjusting entries for the month and prepare the adjusted trial balance.

5a. Prepare the income statement for the month of April 30, 2017.

5b. Prepare the statement of retained earnings for the month of April 30, 2017.

5c. Prepare the balance sheet at April 30, 2017.

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.

Answer 1

urnal entr ro Nozomi Cash Accou April Dr. (S) Cr.($) 30000 1 Cash Capital Commission revenue 30000 Rent exp. 8000 Supplies 1000 2400 1600 1600 350 750 1500 computer Capital Prepaid insurance Salaries exp Salaries exp Repair exp. Telephone exp Drawings Closing bal. 2 Rent exp. 1800 cash 3 Supplies cash 10 Prepaid insurance 2400 cash 2400 When the entries are posted to the rest of T accounts, the ending balance of those accounts balances shown in the unadjusted Trial balance. When the adjusting entries are also posted, the ending balance of the T accounts Balances shown in adjusted rial balance. 14 Salaries exp 1600 cash 1600 24 cash 8000 Commission revenue 8000 28 Salaries exp 1600 cash 1600 29 Repair exp. 350 350 30 Telephone exp 750 750 30 Drawings 1500

a Insurance exp. 1308 Prepaid insurance 133 b Supplies exp. 400 (1000 600 400 dep. Exp. Acc. Dep 500 500 420 Salaries payable 420 e Accounts receivable 1750 Commission revenue 1750

rial balance worksh come Statemern Unadj. T/B Adjustments Adj. T/B Dr. Cr. Dr. Cr. Dr. Account Title Commission Revenue Less:- expenses Rent expense Salaries expense Repair expense Telephone exp Insurance expense Supplies exp. dep. Exp Net Income 9750 Cr 27000 27000 1750 1750 Accounts Receivable Computer Supplies Prepaid Insurance Acc. Dep.-Computer Salaries payable Capital Drawings Commission Revenue Rent expense Salaries expense Repair expense Telephone exp Insurance expense Supplies exp. dep. Exp Total 350 750 1000 400 600 133 2267 500 420 50000 420 500 7,553 2,197 50000 8000 1750 9750 Statement of Owner's Equit Opening Balance Add:- Net Income Less:- drawings Closing balance 3200 420 2197 1500 750 133 750 133 58000 58000 3203 3203 60670 60670

Balance She Assets Current assets:- Cash Accounts Receivable Prepaid Insurance Supplies PPE Computer Less:- Accumulated Dep 27,000 1750 2267 600 31,617 20000 500 19500 Total Assets 51,117 Liabilities and owner's Equity Current Liabilities Salaries payable 420 Owner's equity Total Liabilities and owner's Equity 420 50697 51,117

sing entr Post Adjusting Trial Bala Dr. (S Cr.(S) Commission Revenue Income summa Dr.($) Cr.(S) 27,000 9750 9750 Cash Accounts Receivable1750 Computer Supplies Prepaid Insurance Acc. Dep.-Computer Salaries payable Capital Total 7,553 Income sum Rent expense Salaries expense Repair expense Telephone exp. Insurance expense Supplies exp. dep. Exp 20000 600 2267 1,800 3,620 350 750 133 400 500 500 420 50697 51617 51617 Income sum 2,197 Capiatl account 2197 Capiatl account Drawings account 1500 1500