In: Accounting
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 $40,000 cash and computer equipment worth $30,000 in the company. | ||
2 | The company rented furnished office space by paying $2,700 cash for the first month’s (April) rent. | |||
3 | The company purchased $1,700 of office supplies for cash. | |||
10 | The company paid $2,300 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 $24,000 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 $400 cash for minor repairs to the company's computer. | |||
30 | The company paid $850 cash for this month's telephone bill. | |||
30 | Nozomi withdrew $2,000 cash from the company for personal use. |
The company's chart of accounts follows:
101 | Cash | 405 | Commissions Earned |
106 | Accounts Receivable | 612 | Depreciation Expense—Computer Equip. |
124 | Office Supplies | 622 | Salaries Expense |
128 | Prepaid Insurance | 637 | Insurance Expense |
167 | Computer Equipment | 640 | Rent Expense |
168 | Accumulated Depreciation—Computer Equip. | 650 | Office Supplies Expense |
209 | Salaries Payable | 684 | Repairs Expense |
301 | J. Nozomi, Capital | 688 | Telephone Expense |
302 | J. Nozomi, Withdrawals | 901 | Income Summary |
Use the following information:
Required:
1. & 2. Prepare journal
entries to record the transactions for April and post them to the
ledger accounts in Requirement 6b. The company records prepaid and
unearned items in balance sheet accounts.
3. Using account balances from Requirement 6b,
prepare an unadjusted trial balance as of April 30.
April | Journal Entries | Dr. ($) | Cr. ($) |
1 | cash | 40000 | |
computer equipment | 30000 | ||
To capital | 70000 | ||
2 | rent expense | 2700 | |
To cash | 2700 | ||
3 | office supplies | 1700 | |
To cash | 1700 | ||
10 | prepaid insurance | 2300 | |
To cash | 2300 | ||
14 | salaries expenses | 900 | |
To cash | 900 | ||
24 | cash | 24000 | |
To commission earned | 24000 | ||
28 | salaries expenses | 900 | |
To cash | 900 | ||
29 | repair expenses | 400 | |
To cash | 400 | ||
30 | telephone expenses | 850 | |
To cash | 850 | ||
30 | withdrawals | 2000 | |
To cash | 2000 | ||
April | Adjusting Entries | Dr. ($) | Cr. ($) |
30 | insurance expenses | 128 | |
To prepaid insurance | 128 | ||
30 | office supplies expenses (1700-600) | 1100 | |
To office supplies | 1100 | ||
30 | depreciation expenses – computer equipment | 400 | |
To accumulated depreciation – computer equipment | 400 | ||
30 | salaries expenses | 380 | |
To salaries payable | 380 | ||
30 | accounts receivable | 2000 | |
To commission earned | 2000 |
Ledger Accounts - please note that the adjusting entries have not been recorded in the below accounts
Cash | |||
Date | Dr. ($) | Cr. ($) | Balance |
1 | 40000 | 0 | 40000 |
2 | 0 | 2700 | 37300 |
3 | 0 | 1700 | 35600 |
10 | 0 | 2300 | 33300 |
14 | 0 | 900 | 32400 |
24 | 24000 | 0 | 56400 |
28 | 0 | 900 | 55500 |
29 | 0 | 400 | 55100 |
30 | 0 | 850 | 54250 |
30 | 0 | 2000 | 52250 |
Computer equipment | |||
Date | Dr. ($) | Cr. ($) | Balance |
1 | 30000 | 0 | 30000 |
Office supplies | |||
Date | Dr. ($) | Cr. ($) | Balance |
3 | 1700 | 0 | 1700 |
Prepaid insurance | |||
Date | Dr. ($) | Cr. ($) | Balance |
10 | 2300 | 0 | 2300 |
rent expenses | |||
Date | Dr. ($) | Cr. ($) | Balance |
2 | 2700 | 0 | 2700 |
Salaries expenses | |||
Date | Dr. ($) | Cr. ($) | Balance |
14 | 900 | 0 | 900 |
28 | 900 | 0 | 1800 |
Repair expenses | |||
Date | Dr. ($) | Cr. ($) | Balance |
29 | 400 | 0 | 400 |
telephone expenses | |||
Date | Dr. ($) | Cr. ($) | Balance |
30 | 850 | 0 | 850 |
Withdrawals | |||
Date | Dr. ($) | Cr. ($) | Balance |
30 | 2000 | 0 | 2000 |
Commission Earned | |||
Date | Dr. ($) | Cr. ($) | Balance |
24 | 0 | 24000 | 24000 |
Capital | |||
Date | Dr. ($) | Cr. ($) | Balance |
1 | 0 | 70000 | 70000 |
Unadjusted Trial Balance
Unadjusted Trial Balance | ||
accounts | Dr. ($) | Cr. ($) |
cash | 52250 | |
accounts receivable | 0 | |
office supplies | 1700 | |
prepaid insurance | 2300 | |
computer equipment | 30000 | |
capital | 70000 | |
withdrawals | 2000 | |
commission earned | 24000 | |
rent expenses | 2700 | |
salaries expenses | 1800 | |
telephone expenses | 850 | |
repair expenses | 400 | |
totals | 94000 | 94000 |