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 $34,000 cash and computer equipment worth $40,000 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 $1,000 of office supplies for cash. 10 The company paid $2,500 cash for the premium on a 12-month insurance policy. Coverage begins on April 11 14 The company paid $1,300 cash for two weeks' salaries earned by employees 24 The company collected $9,000 cash for commissions comed. 28 The company paid $1,300 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 $800 cash for this month's telephone bill. 30 Nozomi withdrew $1,600 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 209 Salaries Payable 301 J. Nozomi, Capital 302 J. 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 Computer Equip Use the following information: a. Prepaid insurance of $139 has expired this month. b. At the end of the month, $400 of office supplies are still available. c. This month's depreciation on the computer equipment is $300. d. Employees earned $430 of unpaid and unrecorded salaries as of month-end. e. The company earned $2,050 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 record 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 Gb. 6b. Post the journal entries to the ledger. 7. Prepare a post-closing trial balance.

Answer 1

Adventure Travel Reg 1 Journal entries Date Account 1-Apr Cash Computer Equipment J. Nozomi, Capital Credit Debit $ 34,000 $ 40,000 $ 74,000 $ 1,500 2-Apr Rent Expense Cash $ 1,500 $ 1,000 3-Apr Office Supplies Cash $ 1,000 $ 2,500 10-Apr Prepaid Insurance Cash $ 2,500 $ 1,300 14-Apr Salaries Expense Cash $ 1,300 $ 9,000 24-Apr Cash Commissions Earned $ 9,000 $ 1,300 28-Apr Salaries Expense Cash $ 1,300 $ 350 29-Apr Repairs Expense Cash $ 350 $ 800 30-Apr Telephone Expense Cash $ 800 $ 1,600 30-Apr J. Nozomi, Withdrawals Cash $ 1,600

Balance Date Debit Credit Balance Accounts Receivable 30-Apr $ 2,050 $ 2,050 Date Debit Credit Balance Office Supplies 3-Apr $ 1,000 $ 1,000 30-Apr $ 600 $ 400 Date Debit Credit Prepaid Insurance 10-Apr $ 2,500 30-Apr $ 139 $ 2,500 $ 2,361 3-Apr Adventure Travel Req 2, 4, 6b T Accounts Date Debit Credit Balance Cash 1-Apr $ 34,000 $ 34,000 2-Apr $ 1,500 $ 32,500 $1,000 $31,500 10-Apr $ 2,500 $ 29,000 14-Apr $ 1,300 $ 27,700 24-Apr $ 9,000 $36,700 28-Apr $ 1,300 $ 35,400 29-Apr $ 350 $ 35,050 30-Apr $ 800 $ 34,250 30-Apr $ 1,600 $ 32,650 Computer Equipment 1-Apr $ 40,000 $ 40,000 J. Nozomi, Capital 1-Apr $ 74,000 $ 74,000 30-Apr $ 4,331 $ 78,331 30-Apr $ 1,600 $ 76,731 Commissions Earned 24-Apr $ 9,000 $ 9,000 30-Apr $ 2,050 $ 11,050 30-Apr $ 11,050 $ - $ 430 Accum. Depr. - Computer Equip 30-Apr $ 300 $ 300 J. Nozomi, Withdrawals 30-Apr $ 1,600 $ 1,600 30-Apr $ 1,600 $ - $ 11,050 $ 4,331 $ - Depreciation Expense-Computer Equip. 30-Apr $ 300 $ 300 30-Apr $ 300 $ - Salaries Payable 30-Apr $ 430 Income Summary 30-Apr $ 11,050 30-Apr $ 6,719 30-Apr $ 4,331 Salaries expense 14-Apr $ 1,300 28-Apr $ 1,300 30-Apr $ 430 30-Apr $ 3,030 Repairs Expense 29-Apr $ 350 30-Apr $ 350 Insurance expense 30-Apr $ 139 30-Apr $ 139 $ $ 139 - $ 1,300 $ 2,600 $ 3,030 $ Rent expense 2-Apr $ 1,500 30-Apr $ 1,500 $ 1,500 $ - Office Supplies Expense 30-Apr $ 600 $ 30-Apr $ 600 $ 600 - $ $ 350 - Telephone Expense 30-Apr $ 800 30-Apr $ 800 $ $ 800 .

Req3 Unadjusted TB Debit Credit 32,650 1,000 2,500 40,000 74,000 Adventure Travel Account Names Cash Accounts Receivable Office Supplies Prepaid Insurance Computer Equipment Accumulated Depreciation-Computer Equip. Salaries Payable J. Nozomi, Capital J. Nozomi, Withdrawals Commissions Earned Depreciation Expense-Computer Equip. Salaries expense Insurance expense Rent expense Office Supplies Expense Repairs Expense Telephone Expense Totals 1,600 9,000 2,600 1,500 350 800 83,000 83,000

Req4 Adjusting entries 30-Apr Insurance expense Prepaid Insurance $ 139 $ 139 $ 600 =1,000-400 30-Apr Office Supplies Expense Office Supplies $ 600 $ 300 30-Apr Depreciation Expense-Computer Equip. Accumulated Depreciation-Computer Equip. $ 300 $ 430 30-Apr Salaries expense Salaries Payable $ 430 $ 2,050 30-Apr Accounts Receivable Commissions Earned $ 2,050

Adventure Travel Account Names Cash Accounts Receivable Office Supplies Prepaid Insurance Computer Equipment Accumulated Depreciation-Computer Equip. Salaries Payable J. Nozomi, Capital J. Nozomi, Withdrawals Commissions Earned Depreciation Expense-Computer Equip. Salaries expense Insurance expense Rent expense Office Supplies Expense Repairs Expense Telephone Expense Totals Req 4 Adjusted TB Debit Credit 32,650 2,050 400 2,361 40,000 300 430 74,000 1,600 11,050 300 3,030 139 1,500 600 350 800 85,780 85,780

11,050 Adventure Travel Income Statement For the Month Ended April 30, 2017 Commissions Earned Expenses Depreciation Expense-Computer Equip. Salaries expense Insurance expense Rent expense Office Supplies Expense Repairs Expense Telephone Expense Total Expenses Net Income 300 3,030 139 1,500 600 350 800 6,719 4,331 Statement of Owners Equity For the Month Ended April 30, 2017 Capital, April 1 Add Net Income Less Drawings Capital, April 30 74,000 4,331 (1,600) 76,731

Adventure Travel Balance Sheet As of April 30, 2017 Assets Current Assets Cash Accounts Receivable Office Supplies Prepaid Insurance Total Current Assets 430 Liabilities & Owners Equity Current Liabilities 32,650 Salaries Payable 2,050 400 2,361 37,461 Total Current Liabilities 430 76,731 Fixed Assets Computer Equipment Accumulated Depreciation-Computer Equip. Ttoal Fixed Assets Owners Equity 40,000 Capital (300) 39,700 Total Assets 77,161 Total Liabilities & Owners Equity 77,161

Req 6a Closing entries Date Account 30-Apr Commissions Earned Income Summary (To close revenue accounts) Debit $ 11,050 $ 11,050 $ 6,719 30-Apr Income Summary Depreciation Expense-Computer Equip. Salaries expense Insurance expense Rent expense Office Supplies Expense Repairs Expense Telephone Expense (To close expenses accounts) $ $ $ $ $ $ $ 300 3,030 139 1,500 600 350 800 $ 4,331 30-Apr Income Summary J. Nozomi, Capital (To close Income Summary) $ 4,331 $ 1,600 30-Apr J. Nozomi, Capital J. Nozomi, Withdrawals (To close withdrawals account) $ 1,600

Req7 Post Closing TB Debit 32,650 2,050 400 2,361 40,000 300 430 76,731 Adventure Travel Account Names Cash Accounts Receivable Office Supplies Prepaid Insurance Computer Equipment Accumulated Depreciation-Computer Equip. Salaries Payable J. Nozomi, Capital J. Nozomi, Withdrawals Commissions Earned Depreciation Expense-Computer Equip. Salaries expense Insurance expense Rent expense Office Supplies Expense Repairs Expense Telephone Expense Totals 77,461 77,461