Question

On April 1, 2020, Jennifer Stafford created a new travel agency, See-It-Now Travel. The following transactions occurred during the company’s first month.

April 1

Stafford invested $48,000 cash and computer equipment worth $20,000 in the company.

2	The company rented furnished office space by paying $2,300 cash for the first month’s   (April) rent.

3	The company purchased $1,400 of office supplies for cash.

10	The company paid $3,000 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 $10,500 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 $250 cash for minor repairs to the company's computer.

30	The company paid $1,050 cash for this month's telephone bill.

30	Stafford withdrew $2,200 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. Stafford, Capital	688	Telephone Expense
302	J. Stafford, Withdrawals	901	Income Summary

Use the following information:

a.	Two-thirds of one month’s insurance coverage has expired.
b.	At the end of the month, $600 of office supplies are still available.
c.	This month’s depreciation on the computer equipment is $600.
d.	Employees earned $520 of unpaid and unrecorded salaries as of month-end.
e.	The company earned $1,600 of commissions that are not yet billed at month-end.

Answer 1

Date	Account Titles	Debit	Credit
April		$	$
1	Cash	48,000
	Computer Equipment	20,000
	J. Stafford, Capital		68,000
2	Rent Expense	2,300
	Cash		2,300
3	Office Supplies	1,400
	Cash		1,400
10	Prepaid Insurance	3,000
	Cash		3,000
14	Salaries Expense	1,600
	Cash		1,600
24	Cash	10,500
	Commissions Earned		10,500
28	Salaries Expense	1,600
	Cash		1,600
29	Repairs Expense	250
	Cash		250
30	Telephone Expense	1,050
	Cash		1,050
30	J. Stafford, Withdrawals	2,200
	Cash		2,200
Adjusting Entries
April 30
a.	Insurance Expense ( 3,000 / 12 * 2/3 )	167
	Prepaid Insurance		167
b.	Office Supplies Expense	800
	Office Supplies		800
c.	Depreciation Expense: Computer Equip.	600
	Accumulated Depreciation : Computer Equip.		600
d.	Salaries Expense	520
	Salaries Payable		520
e.	Accounts Receivable	1,600
	Commissions Earned		1,600