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 $30,000 cash and computer equipment worth $20,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $1,800 cash for the first month's (April) rent. 3 The company purchased $1,000 of office supplies for cash. 10 The company paid $2,400 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. 14 The company paid $1,600 cash for two weeks' salaries earned by employees. 24 The company collected $8,000 cash for commissions earned. 28 The company paid $1,600 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 $750 cash for this month's telephone bill. 30 The company paid $1,500 cash in dividends. The company's chart of accounts follows. 101 Cash 106 Accounts Receivable 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 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 Use the following information: a. Prepaid insurance of $133 has expired this month. b. At the end of the month, $600 of office supplies are still available. c. This month's depreciation on the computer equipment is $500. d. Employees earned $420 of unpaid and unrecorded salaries as of month-end. e. The company earned $1,750 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.

Answer 1

Adventure Travel Reg 1 Journal entries Date Account 1-Apr Cash Computer Equipment Common Stock Credit Debit $ 30,000 $ 20,000 $ 50,000 $ 1,800 2-Apr Rent Expense Cash $ 1,800 3-Apr Office Supplies Cash $ 1,000 $ 1,000 $ 2,400 10-Apr Prepaid Insurance Cash $ 2,400 $ 1,600 14-Apr Salaries Expense Cash $ 1,600 $ 8,000 24-Apr Cash Commissions Earned $ 8,000 $ 1,600 28-Apr Salaries Expense Cash $ 1,600 $ 350 29-Apr Repairs Expense Cash $ 350 $ 750 30-Apr Telephone Expense Cash $ 750 $ 1,500 30-Apr Dividends Cash $ 1,500

Adventure Travel Req 2, 6b T Accounts Date Debit Date Cash 1-Apr $ 30,000 24-Apr $ 8,000 Credit Date Credit Credit Date Credit Debit Date Accounts Receivable Date Debit Date Office Supplies 3-Apr $ 1,000 Debit Date Prepaid Insurance 10-Apr $ 2,400 2-Apr $ 1,800 3-Apr $1,000 10-Apr $ 2,400 14-Apr $ 1,600 28-Apr $ 1,600 29-Apr $ 350 30-Apr $ 750 30-Apr $ 1,500 Unadj Bal. $ 27,000 Unadj Bal. $1,000 Unadj Bal. $ 2,400 Unadj Bal. Apr 30 Adj $ $ 1,750 Apr 30 Adj $ 400 Apr 30 Adj $ 133 Adj Bal. $ Adj Bal. $ 2,267 Adj Bal. $ 27,000 Computer Equipment 1-Apr $ 20,000 Adj Bal. $ 1,750 Accum. Depr. - Computer Equip 600 Salaries Payable Unadj Bal. $ 20,000 Unadj Bal. Apr 30 Adj $ $ . 500 Unadj Bal. Apr 30 Adj $ $ . 420 Adj Bal. $ 500 $ 420 $ 20,000 Common Stock 1-Apr $ 50,000 Adj Bal. Retained Earnings Adj Bal. Dividends 30-Apr $ 1,500 Income Summary Unadj Bal. $ 50,000 Unadj Bal. $ . Unadj Bal. $ 1,500 Unadj Bal. $ . Adj Bal. $ 50,000 Adj Bal. $1,500 Adj Bal. $ . Apr 30 Close $ 1,500 Apr 30 Close $ 2,197 Adj Bal. $ Apr 30 Close $ 1,500 Apr 30 Close $ 7,553 Apr 30 Close $ 9,750 Apr 30 Close $ 2,197 Bal. $ 697 Bal. $ S . $ 50,000 Commissions Earned 24-Apr $ 8,000 Depreciation Expense-Computer Equip. Insurance expense Salaries expense 14-Apr $ 1,600 28-Apr $ 1,600 Unadj Bal. Apr 30 Adj $ 8,000 Unadj Bal. $ 1,750 Apr 30 Adj $ $ . 500 Unadj Bal. $ 3,200 Apr 30 Adj $ 420 Unadj Bal. Apr 30 Adj $ $ . 133 Adj Bal. $ 9,750 Adj Bal. $ 500 Adj Bal. $ 3,620 Adj Bal. $ 133 Apr 30 Close $ 9,750 Apr 30 Close $ 500 Apr 30 Close $ 3,620 Apr 30 Close $ 133 $ - Bal. Bal. Office Supplies Expense Rent expense 2-Apr $ 1,800 29-Apr $ Repairs Expense 350 Telephone Expense 30-Apr $ 750 Unadj Bal. $ 1,800 Unadj Bal. $ 350 Unadj Bal. $ 750 Unadj Bal. Apr 30 Adj $ $ - 400 Adj Bal. $ 1,800 Adj Bal. $ 400 Adj Bal. $ 350 Adj Bal. $ 750 Apr 30 Close $ 1,800 Apr 30 Close $ 400 Apr 30 Close $ 350 Apr 30 Close $ 750 Bal. $ - Bal. Bal. $ - Bal. $

Reg 3 Unadjusted TB Debit Credit 27,000 1,000 2,400 20,000 50,000 Adventure Travel Account Names Cash Accounts Receivable Office Supplies Prepaid Insurance Computer Equipment Accumulated Depreciation-Computer Equip. Salaries Payable Common Stock Retained Earnings Dividends Commissions Earned Depreciation Expense-Computer Equip. Salaries expense Insurance expense Rent expense Office Supplies Expense Repairs Expense Telephone Expense Totals 1,500 8,000 3,200 1,800 350 750 58,000 58,000

Req4 Adjusting entries Date Account 30-Apr Insurance expense Prepaid Insurance Credit Calculation Debit $ 133 $ 133 $ 400 =1,000-600 30-Apr Office Supplies Expense Office Supplies $ 400 $ 500 30-Apr Depreciation Expense-Computer Equip. Accumulated Depreciation-Computer Equip. $ 500 $ 420 30-Apr Salaries expense Salaries Payable $ 420 $ 1,750 30-Apr Accounts Receivable Commissions Earned $ 1,750

Req4 Adjusted TB Debit Credit 27,000 1,750 600 2,267 20,000 500 420 50,000 Adventure Travel Account Names Cash Accounts Receivable Office Supplies Prepaid Insurance Computer Equipment Accumulated Depreciation-Computer Equip. Salaries Payable Common Stock Retained Earnings Dividends Commissions Earned Depreciation Expense-Computer Equip. Salaries expense Insurance expense Rent expense Office Supplies Expense Repairs Expense Telephone Expense Totals 1,500 9,750 500 3,620 133 1,800 400 350 750 60,670 60,670

9,750 Req 5a Adventure Travel Income Statement For Month Ended April 30, 2018 Revenues Commissions Earned Expenses Depreciation Expense-Computer Equip. Salaries expense Insurance expense Rent expense Office Supplies Expense Repairs Expense Telephone Expense Total Expenses Net Income 500 3,620 133 1,800 400 350 750 7,553 2,197 Statement of Retained Earnings For Month Ended April 30, 2018 Retained Earnings, April 1, 2018 Add: Net Income 2,197 2,197 (1,500) 697 Less: Dividends Retained Earnings, April 30, 2018

Reg 5c Adventure Travel Balance Sheet April 30, 2018 Assets Current Assets Cash Accounts Receivable Office Supplies Prepaid Insurance Total Current Assets 27,000 1,750 600 2,267 31,617 Property, Plant & Equipment Computer Equipment Accumulated Depreciation-Computer Equip. Total Property, Plant & Equipment Total Assets 20,000 (500) 19,500 51,117 Liabilities & Stockholders Equity Current Liabilities Salaries Payable 420 Stockholders Equity Common Stock Retained earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 50,000 697 50,697 51,117

Req 6a Closing entries Date Account 30-Apr Commissions Earned Income Summary Credit Calculation Debit $ 9,750 $ 9,750 $ 7,553 30-Apr Income Summary Depreciation Expense-Computer Equip. Salaries expense Insurance expense Rent expense Office Supplies Expense Repairs Expense Telephone Expense $ $ $ $ 500 3,620 133 1,800 $ 400 $ 350 750 $ 2,197 =9,750-7,553 30-Apr Income Summary Retained Earnings $ 2,197 $ 1,500 30-Apr Retained Earnings Dividends $ 1,500

Adventure Travel Account Names Cash Accounts Receivable Office Supplies Prepaid Insurance Computer Equipment Accumulated Depreciation-Computer Equip. Salaries Payable Common Stock Retained Earnings Totals Req 7 Post Closing TB Debit Credit 27,000 1,750 600 2,267 20,000 500 420 50,000 697 51,617 51,617