Question

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

Apr.		1		Nozomi invested $30,000 cash and computer equipment worth $20,000 in the company in exchange for common stock.
Apr.		2		The company rented furnished office space by paying $1,800 cash for the first month’s (April) rent.
Apr.		3		The company purchased $1,000 of office supplies for cash.
Apr.		10		The company paid $2,400 cash for the premium on a 12-month insurance policy. Coverage begins on April 11.
Apr.		14		The company paid $1,600 cash for two weeks’ salaries earned by employees.
Apr.		24		The company collected $8,000 cash on commissions from airlines on tickets obtained for customers.
Apr.		28		The company paid $1,600 cash for two weeks’ salaries earned by employees.
Apr.		29		The company paid $350 cash for minor repairs to the company’s computer.
Apr.		30		The company paid $750 cash for this month’s telephone bill.
Apr.		30		The company paid $1,500 cash in dividends.

Information for month-end adjustments follows:

Two-thirds (or $133) 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 $500.

Employees earned $420 of unpaid and unrecorded salaries as of month-end.

The company earned $1,750 of commissions that are not yet billed at month-end.

Prepare the required journal entries, adjusting entries, and closing entries for Adventure Travel.

Journal entry worksheet

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Answer 1

Part 1 - Journal Entry Worksheet

Date	Accounts Title and Explanation	Debit	Credit
April 1	Cash	$30000
	Computer Equipment	$20000
	Capital		$50000
	(Being Cash and Computer Contributed to capital)
April 2	Rent Expenses	$1800
	Cash		$1800
	(Rent paid in cash for April Month)
April 3	Supplies	$1000
	Cash		$1000
	(Supplies Purchased for cash)
April 10	Insurance Expenses	$2400
	Cash		$2400
	(Insurance expenses paid in cash for 12 Months)
April 14	Salary Expenses	$1600
	Cash		$1600
	(Salary paid in cash)
April 24	Cash	$8000
	Commission Income		$8000
	(Commission income received in cash)
April 28	Salary Expenses	$1600
	Cash		$1600
	(Salary paid from cash account)
April 29	Repairs Expenses	$350
	Cash		$350
	(Repairs expenses paid)
April 30	Telephone Expenses	$750
	Cash		$750
	(Telephone Bill paid)
April 30	Dividend	$1500
	Cash		$1500
	(Dividend Paid in cash)

Part 2 - Adjusting Journal Entry

Date	Accounts Title and Explanation	Debit	Credit
April 30	Prepaid Insurance ($2400 - $133)	$2267
	Insurance Expenses		$2267
	(Insurance relating from 1 may 2017 to 10 April 2017)
April 30	Supplies Expenses ($1000 - $600)	$400
	Supplies		$400
	(Supplies Consumed of $400)
April 30	Depreciation expenses - Computer Equipment	$500
	Accumulated Depreciation - Computer Equipment		$500
	(Depreciation charged on asset)
April 30	Salary Expenses	$420
	Salary Payable		$420
	(Salary expenses payable)
April 30	Commission Income	$1750
	Accounts Receivable		$1750
	(Commission income not yet received)

Part 3 - Closing Journal Entries

Date	Accounts Title and Explanation	Debit	Credit
April 30	Commission Income ($8000+$1750)	$9750
	Income Summary		$9750
	(Income transferred to income summary)
April 30	Income Summary	$7553
	Rent Expenses		$1800
	Depreciation Expenses		$500
	Insurance Expenses ($2400 - $2267)		$133
	Supplies Expenses		$400
	Salary Expenses ($1600+$1600+$420)		$3620
	Repair Expenses		$350
	Telephone Expenses		$750
	(Expenses Trnasferred to income summary)
April 30	Income Summary ($9750 - $7553)	$2197
	Common stock		$2197
	(Income summary transferred to common stock account)
April 30	Common Stock	$1500
	Dividend Dividend adjusted to Common stock		$1500