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 $46,000 cash and computer equipment worth $25,000 in the company in exchange for common stock.
		2		The company rented furnished office space by paying $1,500 cash for the first month’s (April) rent.
		3		The company purchased $1,300 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 $1,600 cash for two weeks' salaries earned by employees.
		24		The company collected $17,500 cash on commissions from airlines on tickets obtained for customers.
		28		The company paid $1,600 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 $1,400 cash for this month's telephone bill.
		30		The company paid $2,100 cash in dividends.

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
307	Common Stock	688	Telephone Expense
318	Retained Earnings	901	Income Summary
319	Dividends

Use the following information:

Two-thirds (or $128) of one month’s insurance coverage has expired.

At the end of the month, $600 of office supplies are still available.

This month’s depreciation on the computer equipment is $300.

Employees earned $500 of unpaid and unrecorded salaries as of month-end.

The company earned $2,300 of commissions that are not yet billed at month-end.

Required:

6a. Prepare journal entries to close the temporary accounts and then post to Requirement 6b.
7. Prepare a post-closing trial balance.

Answer 1

Date	Accounts Titles & Explanation	Debit	Credit
Apr-01	Cash	$46,000
	Computer equipment	$25,000
	Common Stock		$71,000
Apr-02	Rent Expenses	$1,500
	Cash		$1,500
Apr-03	Office supplies	$1,300
	Cash		$1,300
Apr-10	Prepaid Insurance	$2,300
	Cash		$2,300
Apr-14	Salaries Expenses	$1,600
	Cash		$1,600
Apr-24	Cash	$17,500
	Commission Earned		$17,500
Apr-28	Salaries Expenses	$1,600
	Cash		$1,600
Apr-29	Repair and Maintenance	$500
	Cash		$500
Apr-30	Telephone Expenses	$1,400
	Cash		$1,400
Apr-30	Dividends	$2,100
	Cash		$2,100
				Adjustment
Trail Balance		Debit	Credit	Debit	Credit	Debit	Credit
	Cash	$51,200				$51,200
	Prepaid Insurance	$2,300			$128	$2,172
	Accounts Receivable			$2,300		$2,300
	Computer equipment	$25,000				$25,000
	Accumulated Depreciation—Computer Equip.				$300		$300
	Office supplies	$1,300			$700	$600
	Salaries Payable				$500		$500
	Common Stock		$71,000				$71,000
	Commission Earned		$17,500		$2,300		$19,800
	Rent Expenses	$1,500				$1,500
	Salaries Expenses	$3,200		$500		$3,700
	Repair and Maintenance	$500				$500
	Telephone Expenses	$1,400				$1,400
	Dividends	$2,100				$2,100
	Insurance Expenses			$128		$128
	Office Supplies Expenses			$700		$700
	Depreciation Expense—Computer Equip.			$300		$300
		$88,500	$88,500	$3,928	$3,928	$91,600	$91,600
Adjusting Entry
Apr-30	Insurance Expenses	$128
	Preapid Insurance		$128
	Office Supplies Expenses	$700
	Office Supplies		$700
	Depreciation Expense—Computer Equip.	$300
	Accumulated Depreciation—Computer Equip.		$300
	Salaries Expenses	$500
	Salaries Payable		$500
	Accounts Receivable	$2,300
	Commissions Earned		$2,300