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 $47,000 cash and computer equipment worth $35,000 in the company.
		2		The company rented furnished office space by paying $1,700 cash for the first month’s (April) rent.
		3		The company purchased $1,900 of office supplies for cash.
		10		The company paid $2,700 cash for the premium on a 12-month insurance policy. Coverage begins on April 11.
		14		The company paid $1,700 cash for two weeks' salaries earned by employees.
		24		The company collected $9,500 cash for commissions earned.
		28		The company paid $1,700 cash for two weeks' salaries earned by employees.
		29		The company paid $500 cash for minor repairs to the company's computer.
		30		The company paid $1,500 cash for this month's telephone bill.
		30		Nozomi withdrew $1,800 cash from the company for personal use.

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
301	J. Nozomi, Capital	688	Telephone Expense
302	J. Nozomi, Withdrawals	901	Income Summary

Use the following information:

1. Prepaid insurance of $150 has expired this month.
2. At the end of the month, $700 of office supplies are still available.
3. This month’s depreciation on the computer equipment is $400.
4. Employees earned $420 of unpaid and unrecorded salaries as of month-end.
5. The company earned $2,450 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 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.

Answer 1

Part 1 & 2: Date Apr 1. General Journal Cash Computer equipment J. Nozomi, Capital Debit Credit 47000 35000 82000 Apr 2. 1700 Rent expense Cash 1700 Apr 3. 1900 Office supplies cash 1900 Apr 10. Prepaid insurance 2700 cash 2700 Apr 14. salaries expense cash 1700 | 1700 Apr 24. 9500 cash commission earned 9500 Apr 28. 1700 salaries expense cash 1700 Apr 29. 500 Repairs expense cash 500 Apr 30. 1500 Telephone expense cash 1500 Apr 30. 1800 J. Nozomi, With drawals cash 1800

Part 3 ADVENTURE TRAVEL Unjusted Trial Balance April 30. Account Title Cash Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated depreciation-Computer equipment Salaries payable J. Nozomi, Capital J. Nozomi, Withdrawals Commissions earned Depreciation expense, Computer equipment Salaries expense Insurance expense Rent expense Office supplies expense Repairs expense Telephone expense Total Debit Credit 43000 o 1900 2700 35000 0 0 82000 1800 9500 3400 1700 500 1500 9150091500

Credit Part 4: Transaction General Journal Insurance Expense Prepaid Insurance Debit 150 150 b 1200 Office Supplies Expense Office Supplies (1900-700) 1200 400 Depreciation Exp-Computer Equipment | Accum Depreciation-Computer Equip 400 420 Salaries Expense Salaries Payable 420 2450 Accounts Receivable Commissions Earned 2450

11950 L Part 5a: ADVENTURE TRAVEL Income Statement For Month Ended April 30. Commissions earned Expenses Depreciation expense-Computer equipment Salaries expense Insurance expense Rent expense Office supplies expense Repairs expense Telephone expense Total expense Net Income 400 3820 150 1700 1200 500 1500 9270 2680 Part 5b: ADVENTURE TRAVEL Statement of owner's equity For Month Ended April 30. J. Nozomi, Capital, April 1. Investment by owner Net Income Withdrawals J. Nozomi, Capital, April 30. 82000 2680 -1800 82880 82880

Credit Debit 43000 2450 L 700 2550 35000 1400 Part 4. ADVENTURE TRAVEL Adjusted Trial Balance April 30. Account Title Cash Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated depreciation - Computer equipment Salaries payable J. Nozomi, Capital J. Nozomi, Withdrawals Commissions earned Depreciation expense- Computer equipment Salaries expense Insurance expense Rent expense Office supplies expense Repairs expense Telephone expense Total 420 82000 1800 11950 400 3820 150 1700 1200 500 1500 94770 94770

Part 5c: ADVENTURE TRAVEL Balance Sheet April 30. Assets | Cash 43000 Accounts receivable Office supplies 700 Prepaid insurance 2550 Computer equipment 35000 Less : Accumulated depreciation-Computer equipment | -400 34600 Total assets 83300 2450 Liabilities Salaries payable 420 Equity J. Nozomi, Capital 82880 Total liabilities and equity 83300

Part 6a: Date General Journal Apr 30. Commissions earned Income summary Debit Credit 11950 11950 9270 Apr 30. Income summary Depreciation expense-Computer equipment Salaries expense Insurance expense Rent expense Office supplies expense Repairs expense Telephone expense 400 3820 150 1700 1200 500 1500 2680 Apr 30. Income summary J. Nozomi, capital 2680 1800 Apr 30. J. Nozomi, capital J. Nozomi, Withdrawals 1800

Date Apr 1. Computer equipment Debit Credit Balance 35000 35000 preciation expense-computer equipme Date Debit Credit Balance Apr 30.Adj 400 400 Apr 30. close 400 0 Repair expense Date Debit Credit Balance Apr 29. 5001 Apr 30. Close. 5000 Part 6b: Ledget Accounts cash Date Debit Credit Balance Apr 1. 47000 47000 Apr 2. 1700 45300 Apr 3. 1900 43400 Apr 10. 2700 40700 Apr 14 1700 39000 Apr 24. 9500 48500 Apr 28. 1700 46800 Apr 29. 500 46300 Apr 30. Tel. 1500 44800 Apr 30. WD 1800 43000 mulated depreciation-Computer equip Date Debit Credit Balance Apr 30. Adj. 400 400 salaries expense Date Debit Credit Balance Apr 14. 1700 1700 Apr 28. 1700 3400 Apr 30. Adj. 420 3820 Apr 30. Close. | 3820 0 Telephone expense Date Debit Credit Balance Apr 30. 1500 1500 Apr 30. Close. 1500 0 Salaries payable Date Debit Credit Balance Apr 30. Adj. 420 420 Income summary Date Debit Credit Balance Apr 30. Rev. 11950 11950 Apr 30. Exp. 9270 2 680 Apr 30. Close 2680 Account recievable Debit Credit Balance 2450 2450 Date Apr 30. Adj. J. Nozomi, Capital Debit Credit Balance 82000 82000 2680 84680 82880 Insurance expense | Date Debit Credit Balance Apr 30. Adj. 150 Apr 30. Close. 150 Date Apr 1. Apr 30. Apr 30. 1800 Date Apr 3. Apr 30. Adj. Office supplies Debit Credit Balance 1900 1900 1200 700 Rent expense Date Debit Credit Balance Apr 2. 1700 Apr 30. Close. 1700 0 1700 J. Nozomi, Withdrawals Date Debit Credit Balance Apr 30. 1800 / 1800 Apr 30. 18000 1700 Date Apr 10. Apr 30. Adj. Prepaid insurance Debit Credit Balance 2700 2700 150 2550 Commission earned Date Debit Credit Balance Apr 24. 9500 9500 Apr 30. Adj 2450 11950 Apr 30. close 11950 Office supplies expense Date Debit Credit Balance Apr 30. Adj. 1200 1200 Apr 30. Close. 1200 Sheet 709 Sheet710 Sheet711 Sheet712 Sheet713 Sheet714 /Sheet715 Sheet716 Sheet717 III

Part 7. ADVENTURE TRAVEL Post closing Trial balance April 30. Account Title Cash Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated depreciation - Computer equipment Salaries payable J. Nozomi, Capital Total Debit Credit 43000 2450 700 2550 35000 400 420 82880 83700 83700