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 $31,000 cash and computer equipment worth $35,000 in the company.
		2		The company rented furnished office space by paying $1,500 cash for the first month’s (April) rent.
		3		The company purchased $1,500 of office supplies for cash.
		10		The company paid $2,600 cash for the premium on a 12-month insurance policy. Coverage begins on April 11.
		14		The company paid $900 cash for two weeks' salaries earned by employees.
		24		The company collected $18,000 cash on commissions from airlines on tickets obtained for customers.
		28		The company paid $900 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 $1,300 cash for this month's telephone bill.
		30		Nozomi withdrew $2,300 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. Two-thirds (or $144) of one month’s insurance coverage has expired.
2. At the end of the month, $500 of office supplies are still available.
3. This month’s depreciation on the computer equipment is $600.
4. Employees earned $580 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, 2017.
5b. Prepare the statement of owner's equity 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.

View transaction list Journal entry worksheet 10 Nozomi invested $31,000 cash and computer equipment worth $35,000 in the company Note: Enter debits before credits. Date General Journal Debit Credit April 01 Record entry Clear entry View general journal

etc

Answer 1

Part 1 &2: Debit Credit Date General Journal 31000 Apr 1 as 35000 Computer equipment J. Nozomi, Capital 66000 Apr 2 1500 Rent expense 1500 as Apr 3 Office supplies 1500 cash 1500 Apr 10 Prepaid insuran ce 2600 2600 cash Apr 14 900 salaries expense cash 900 18000 cash Apr 24 18000 commission earned Apr 28 900 salaries expense cash 900 Repairs expense 350 Apr 29 cash 350 1300 Apr 30 Telephone expense cash 1300 Apr 30 2300 J. Nozomi, Withdrawals 2300 cash

Part 3 ADVENTURE TRAVEL Unjusted Trial Balance April 30, 2017 Account Title Debit Credit No 101 Cash 37650 106 Accounts receivable 0 124 Office supplies 1500 2600 128 Prepaid insurance 167 Computer equipment 35000 Accumulated depreciation-Computer equipment 168 0 209Salaries payable 0 301 J. Nozomi, Capital 66000 J. Nozomi, Withdrawals 2300 302 405 Commissions earned 18000 Depreciation expense- Computer equipment 612 0 622Salaries expense 1800 0 63/ | Insurance expense 1500 640 Rent expense 650 Office supplies expense 0 684 Repairs expense 350 688Telephone expense 1300 Total 84000 84000

Part 4: Transaction General Journal Debit Credit Insurance Expense 144 Prepaid Insuran ce 144 (2600/12)*2/3 Office Supplies Expense 1000 Office Supplies 1000 (1500-500) Depreciation Exp-Computer Equipment 600 Accum Depreciation-Computer Equip 600 Salaries Expense 580 Salaries Pavable 580 Accounts Receivable 2450 Commissions Earneg 2450

Part 4 ADVENTURE TRAVEL Adjusted Trial Balance April 30, 2017 Account Title Debit Credit No 101 Cash 37650 106 Accounts receivable 2450 124 Office supplies 500 2456 128 Prepaid insurance 167 Computer equipment 35000 Accumulated depreciation-Computer equipment 168 600 209Salaries payable 580 307 J. Nozomi, Capital 66000 J. Nozomi, Withdrawals 2300 319 20450 405 Commissions earned Depreciation expense- Computer equipment 612 600 622Salaries expense 2380 144 b3/ | Insurance expense 1500 640 Rent expense 650 Office supplies expense 1000 684 Repairs expense 350 688Telephone expense 1300 Total 87630 87630

Part 5a: ADVENTURE TRAVEL Income Statement For Month Ended April 30, 2017 20450 Commissions earned Expenses Depreciation expense-Computer equipment 600 Salaries expense 2380 Insurance expense 144 1500 Rent expense 1000 Office supplies expense Repairs expense 350 Telephone expense 1300 Total expense 7274 Net Income 13176 Part 5b: ADVENTURE TRAVEL Statement of owner's equity For Month Ended April 30, 2017 J. Nozomi, Capital, April 1, 2017 0 Investment by owner 66000 Net Income 13176 Withdrawals 2300 76876 76876 J. Nozomi, Capital, April 30, 2017

Part 5c: ADVENTURE TRAVEL Balance Sheet April 30, 2017 Assets Cash 37650 Accounts receivable 2450 Office supplies 500 2456 Prepaid insuran ce Computer equipment 35000 Less : Accumulated depreciation-Computer equipment 600 34400 Total assets 77456 Liabilities Salries payable 580 Equity Nozomi, Capital 76876 Total liabilities and equity 77456

Part 6a: Date General Journal Debit Credit Apr 30. Commissions earned 20450 Income summary 20450 7274 Apr 30. Income summary Depreciation expense-Computer equipment 600 2380 Salaries expense Insurance expense 144 1500 Rent expense ffice supplies expense 1000 Repairs expense 350 Telephone expense 1300 13176 Apr 30. Income summary J. Nozomi, capital 13176 Apr 30. |J. Nozomi, capital 2300 J. Nozomi, Withdrawals 2300

Part 6a: Date General Journal Debit Credit Apr 30. Commissions earned 20450 Income summary 20450 7274 Apr 30. Income summary Depreciation expense-Computer equipment 600 2380 Salaries expense Insurance expense 144 1500 Rent expense ffice supplies expense 1000 Repairs expense 350 Telephone expense 1300 13176 Apr 30. Income summary J. Nozomi, capital 13176 Apr 30. |J. Nozomi, capital 2300 J. Nozomi, Withdrawals 2300

Part 6b: Ledget Accounts Computer equipment reciation expense-computer equi Repair expense cas Debit Credit Balance Debit Credit Balance Date Date Debit Credit BalanceDate Debit Credit Balance Apr 30.Acj 31000 31000 35000 35000 600 Apr 29 350 0Apr 30. Close. 1500 29500 1500 28000 2600 25400 Apr 30. close ulated depreciation-Computer equip Debit Credit Balance Telephone expense salaries expense Debit Credit BalanceDate Debit Credit Balance Apr 14 900 24500 600 Date 18000 42500 900 900 Apr 30. 1300 1300 900 41600 Salaries payable 900 1800 Apr 30. Close 1300 Apr 30. Ad, 580 350 41250 Debit Credit Balance 2380 1300 39950 Apr 30. Close Apr 30. Tel. Apr 30. Ad 580 580 2380 Income summa Debit Credit Balance Apr 30. WD 2300 37650 Date 0450 20450 J. Nozomi, Capital Insurance expense Apr 30. Rev Debit Credit Balance Account recievable Date Debit Credit Balance Apr 30. Exp. 7274 144 Apr 30. Close 13176 13176 Debit Credit Balance Apr 30. Adj 66000 66000 0 Apr 30. Adj 2450 2450 1317679176 Apr 30. Close Apr 30. 2300 76876 Office supplies Rent expense Debit Credit Balance J. Nozomi, Withdrawals Debit Credit Balance Date Debit Credit Balance 1500 1500 1500 1500 Apr 30. Ad 1000500 2300 2300 Apr 30. Close 1500 0 2300 0 Prepaid insurance Office supplies expense Debit Credit Balance Date Commission earned Date Debit Credit Balance Debit Credit Balance Apr 30. Adj. 1000 2600 2600 1000 Apr 10 144 2456 Apr 30. Ad 18000 18000 Apr 30. Close 1000 Apr 30. Ad 2450 20450 Apr 30. close 20450 0

Part 7. ADVENTURE TRAVEL Post closing Trial balance April 30, 2017 Account Title Debit Credit No 37650 101 Cash 106 Accounts receivable 2450 124 Office supplies 500 2456 128 Prepaid insurance 167 Computer equipment 35000 Accumulated depreciation-Computer equipment 168 600 209 Salaries payable 301 J.Nozomi, Capital 580 76876 Total 78056 78056