Question

On April 1, 2017, Robert King created a new travel agency, King Travel. The following transactions occurred during the company’s first month.

Apr. 1 King invested $44,000 cash and computer equipment worth $22,200 in the company.

Apr. 2 The company rented furnished office space by paying $2,000 cash for the first month’s (April) rent.

Apr. 3 The company purchased $2,000 of office supplies for cash.

Apr. 10 The company paid $1,800 cash for the premium on a 12-month insurance policy. Coverage begins on April 11.

Apr. 14 The company paid $1,540 cash for two weeks’ salaries earned by employees.

Apr. 24 The company collected $12,000 cash on commissions from airlines on tickets obtained for customers.

Apr. 28 The company paid $1,540 cash for two weeks’ salaries earned by employees.

Apr. 29 The company paid $650 cash for minor repairs to the company’s computer.

Apr. 30 The company paid $600 cash for this month’s telephone bill.

Apr. 30 King withdrew $1,700 cash from the company for personal use.

Information for month-end adjustments follows:

Two-thirds (or $100) of one month’s insurance coverage has expired.

At the end of the month, $950 of office supplies are still available.

This month’s depreciation on the computer equipment is $370. Employees earned $616 of unpaid and unrecorded salaries as of month-end.

The company earned $1,810 of commissions that are not yet billed at month-end.

Record the entry to close the revenue accounts

Record the entry close to the expense accounts.

Record the entry to close income summary Record the entry to close owners withdrawals account

GENERAL JOURNAL, GENERAL LEDGER, TRIAL BALANCE, INCOME STATEMENT, ST OWNERS EQUITY, BALANCE SHEET, POST CLOSING.

Answer 1

General Journal:

Date	General Journal	Debit	Credit
2017		$	$
Apr 1	Cash	44,000
	Computer Equipment	22,200
	R. King, Capital		66,200
Apr 2	Rent Expense	2,000
	Cash		2,000
Apr 3	Office Supplies	2,000
	Cash		2,000
Apr 10	Prepaid Insurance	1,800
	Cash		1,800
Apr 14	Salaries Expense	1,540
	Cash		1,540
Apr 24	Cash	12,000
	Commissions Earned		12,000
Apr 28	Salaries Expense	1,540
	Cash		1,540
Apr 29	Repairs Expense: Computer	650
	Cash		650
Apr 30	Telephone Expense	600
	Cash		600
Apr 30	R. King, Withdrawals	1,700
	Cash		1,700
Adjusting Entries
Apr 30	Insurance Expense	100
	Cash		100
Apr 30	Office Supplies Expense	1,050
	Office Supplies		1,050
Apr 30	Depreciation Expense	370
	Accumulated Depreciation : Computer Equipment		370
Apr 30	Salaries Expense	616
	Salaries Payable		616
Apr 30	Accounts Receivable	1,810
	Commissions Earned		1,810

General Ledger:

Cash
Apr 1	44,000	Apr 2	2,000
Apr 24	12,000	Apr 3	2,000
		Apr 10	1,800
		Apr 14	1,540
		Apr 28	1,540
		Apr 29	650
		Apr 30	600
		Apr 30	1,700
Apr 30, bal	44,170
Accounts Receivable
Apr 30	1,810
Office Supplies
Apr 3	2,000	Apr 30	1,050
Apr 30, bal	950
Prepaid Insurance
Apr 10	1,800	Apr 30	100
Apr 30, bal	1,700
Computer Equipment
Apr 1	22,200
Accumulated Depreciation : Computer Equipment
		Apr 30	370
Salaries Payable
		Apr 30	616
R. King, Capital
		Apr 1	66,200
R. King, Withdrawals
Apr 30	1,700
Commissions Earned
		Apr 24	12,000
		Apr 30	1,810
			13,810
Salaries Expense
Apr 14	1,540
Apr 28	1,540
Apr 30	616
	3,696
Rent Expense
Apr 2	2,000
Insurance Expense
Apr 30	100
Repairs Expense: Computer
Apr 29	650
Telephone Expense
Apr 30	600
Depreciation Expense
Apr 30	370
Office Supplies Expense
Apr 30	1,050

King Travel Adjusted Trial Balance April 30, 2017
Accounts	Debit	Credit
	$	$
Cash	44,170
Accounts Receivable	1,810
Office Supplies	950
Prepaid Insurance	1,700
Computer Equipment	22,200
Accumulated Depreciation: Computer Equipment		370
Salaries Payable		616
R. King, Capital		66,200
R. King, Withdrawals	1,700
Commissions Earned		13,810
Salaries Expense	3,696
Rent Expense	2,000
Insurance Expense	100
Office Supplies Expense	1,050
Depreciation Expense	370
Repairs Expense: Computer	650
Telephone Expense	600
Totals	$ 80,996	$ 80,996

King Travel Income Statement For the month ended April 30, 2017
Commissions Earned		$ 13,810
Expenses
Salaries Expense	3,696
Rent Expense	2,000
Insurance Expense	100
Office Supplies Expense	1,050
Depreciation Expense	370
Repairs Expense: Computer	650
Telephone Expense	600
Total Expenses		8,466
Net Income		$ 5,344

King Travel Statement of Owner's Equity For the month ended April 30, 2017
R. King, Capital, Balance April 1	$ 0
Add: Capital acquired from owner	66,200
Add: Net income	5,344
Less: R. King, Withdrawals	(1,700)
R. King, Capital, Balance April 30	$ 69,844

King Travel Balance Sheet April 30, 2017
Assets		Liabilities and Owner's Equity
Cash	$44,170	Salaries Payable	616
Accounts Receivable	1,810
Office Supplies	950
Prepaid Insurance	1,700	Owner's Equity	69,844
Computer Equipment	22,200
Less: Accumulated Depreciation: Computer Equipment	(370)
Total Assets	$70,460	Total Liabilities and Owner's Equity	$70,460

Closing entries:

Date	General Journal	Debit	Credit
		$	$
Apr 30, 2017	Commissions Earned	13,810
	Income Summary		13,810
	To close revenue account
Apr 30, 2017	Income Summary	8,466
	Salaries Expense		3,696
	Rent Expense		2,000
	Insurance Expense		100
	Office Supplies Expense		1,050
	Depreciation Expense		370
	Repairs Expense: Computer		650
	Telephone Expense		600
	To close expense accounts
Apr 30, 2017	Income Summary	5,344
	R. King, Capital		5,344
	To close income summary
Apr 30, 2017	R. King, Capital	1,700
	R. King, Withdrawals		1,700
	To close owner's withdrawals account

King Travel Post Closing Trial Balance April 30, 2017
Accounts	Debit	Credit
	$	$
Cash	44,170
Accounts Receivable	1,810
Office Supplies	950
Prepaid Insurance	1,700
Computer Equipment	22,200
Accumulated Depreciation: Computer Equipment		370
Salaries Payable		616
R. King, Capital		69,844
Totals	$ 70,830	$ 70,830