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 $30,000 cash and computer equipment worth $30,000 in the company in exchange for common stock. | ||
2 | The company rented furnished office space by paying $2,000 cash for the first month’s (April) rent. | |||
3 | The company purchased $1,800 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 $1,700 cash for two weeks' salaries earned by employees. | |||
24 | The company collected $20,000 cash on commissions from airlines on tickets obtained for customers. | |||
28 | The company paid $1,700 cash for two weeks' salaries earned by employees. | |||
29 | The company paid $550 cash for minor repairs to the company's computer. | |||
30 | The company paid $850 cash for this month's telephone bill. | |||
30 | The company paid $1,900 cash in dividends. |
The company's chart of accounts follows:
101 | Cash | 405 | Commissions Earned |
106 | Accounts Receivable | 612 | Depreciation Expense—Computer Equip. |
124 | Office Supplies | 622 | Salaries Expense |
128 | Prepaid Insurance | 637 | Insurance Expense |
167 | Computer Equipment | 640 | Rent Expense |
168 | Accumulated Depreciation—Computer Equip. | 650 | Office Supplies Expense |
209 | Salaries Payable | 684 | Repairs Expense |
307 | Common Stock | 688 | Telephone Expense |
318 | Retained Earnings | 901 | Income Summary |
319 | Dividends | ||
Use the following information:
Required:
1. & 2. Prepare journal
entries to record the transactions for April and post them to the
ledger accounts in Requirement 6b. The company records prepaid and
unearned items in balance sheet accounts.
3. Using account balances from Requirement 6b,
prepare an unadjusted trial balance as of April 30.
4. Journalize and post the adjusting entries for
the month and prepare the adjusted trial balance.
5a. Prepare the income statement for the month of
April 30, 2017.
5b. Prepare the statement of retained earnings for
the month of April 30, 2017.
5c. Prepare the balance sheet at April 30,
2017.
6a. Prepare journal entries to close the temporary
accounts and then post to Requirement 6b.
6b. Post the journal entries to the ledger.
7. Prepare a post-closing trial balance.
1. journal entries to record the transactions for April is as shown below:
Date Particulars L.F Amount
($) Amount ($)
Apr-01 Cash
30,000
Computer equipment
30,000
Common Stock
60,000
(For cash and equipment invested)
Apr-02 Rent Expense
2,000
cash
2,000
(for rent paid for april)
Apr-03 Office Supplies
1,800
cash
1,800
(For office supplies purchased)
Apr-10 Prepaid Insurance
2,300
Cash
2,300
(For insurance premium for 12 months paid in
advance)
Apr-14 Salaries expense
1,700
cash
1,700
(for 2 weeks salaries paid)
Apr-24 Cash
20,000
Commissions earned
20,000
(For cash received for commissions earned)
Apr-28 Salaries expense
1,700
cash
1,700
(for 2 weeks salaries paid)
Apr-29 Repairs Expense
550
cash
550
(for cash paid for computer repair)
Apr-30 Telephone expense
850
cash
850
(For cash paid for telephone expense)
Apr-30 Dividends
1,900
cash
1,900
(For cash paid for dividends)
Ledger accounts
Cash
Date Debit Credit Balance
Apr-01 30,000
30,000
Apr-02 2,000
28,000
Apr-03 1,800
26,200
Apr-10 2,300
23,900
Apr-14 1,700
22,200
Apr-24 20,000
42,200
Apr-28 1,700
40,500
Apr-29 550 39,950
Apr-30 850 39,100
Apr-30 1,900
37,200
Computer Equipment
Date Debit Credit Balance
Apr-01 30,000
30,000
Common Stock
Date Debit Credit Balance
Apr-01 60,000
60,000
Rent Expense
Date Debit Credit Balance
Apr-02 2,000 2,000
Office Supplies
Date Debit Credit Balance
Apr-03 1,800 1,800
Prepaid Insurance
Date Debit Credit Balance
Apr-10 2,300 2,300
Salaries exp
Date Debit Credit Balance
Apr-14 1,700 1,700
Apr-28 1,700 3,400
Commissions earned
Date Debit Credit Balance
Apr-24 20,000
20,000
Repairs Expense
Date Debit Credit Balance
Apr-29 550 550
Telephone Expense
Date Debit Credit Balance
Apr-30 850 850
Dividends
Date Debit Credit Balance
Apr-30 1,900
1,900
Trial Balance
Adventure Travel
Unadjusted Trial Balance
April 30, 2017
Debit Credit
Cash 37,200
Office Supplies 1,800
Prepaid insurance 2,300
Computer equipment 30,000
Accumulated dep-Computer Equipment
0
Salaries payable 0
Common Stock 60,000
Retained Earnings
Dividends 1,900
Commission earned 20,000
Depreciation exp-computer equipment 0
Salaries exp 3,400
Insurance exp 0
Rent Expense 2,000
Office Supplies expense 0
Repair Expense 550
Telephone Expense 850
Total 80,000 80,000
4. Adjusting entries
Adjusting Entries:
a. Apr-30 Insurance expense
128
Prepaid Insurance
128
(For Insurance for 30 days
expired)
b. Apr-30 Supplies Expense
1,300
Office Supplies
1300
(for office supplies
expensed)
c. Apr-30 Depreciation exp-Computer
Equipment 600
Accumulated dep-Computer
Equipment
600
(For equipment
depreciated)
d. Apr-30 Salaries expense
340
Salaries payable
340
(For salaries earned)
e. Apr-30 Account Receivable
2,400
Commission Earned
2,400
(for commission eraned but not
billed)