Question

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.

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 $45,000 cash and computer equipment worth $25,000 in the company in exchange for common stock.
		2		The company rented furnished office space by paying $1,900 cash for the first month’s (April) rent.
		3		The company purchased $1,600 of office supplies for cash.
		10		The company paid $2,500 cash for the premium on a 12-month insurance policy. Coverage begins on April 11.
		14		The company paid $800 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 $800 cash for two weeks' salaries earned by employees.
		29		The company paid $450 cash for minor repairs to the company's computer.
		30		The company paid $1,500 cash for this month's telephone bill.
		30		The company paid $2,500 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 $139) of one month’s insurance coverage has expired.

At the end of the month, $400 of office supplies are still available.

This month’s depreciation on the computer equipment is $400.

Employees earned $560 of unpaid and unrecorded salaries as of month-end.

The company earned $1,800 of commissions that are not yet billed at month-end.

Answer 1

Answer 1 & 4 & 6.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1-Apr	Cash	45,000
	Computer	25,000
	Common Stock		70,000
2-Apr	Rent Expenses	1,900
	Cash		1,900
3-Apr	Office Suplies	1,600
	Cash		1,600
10-Apr	Prepaid Insurance	2,500
	Cash		2,500
14-Apr	Salaries Expenses	800
	Cash		800
24-Apr	Cash	17,500
	Commission Earned		17,500
28-Apr	Salaries Expenses	800
	Cash		800
29-Apr	Repairs Expenses	450
	Cash		450
30-Apr	Telephone Expenses	1,500
	Cash		1,500
30-Apr	Dividends	2,500
	Cash		2,500
Adjusting Entry
a.	Insurance Expenses	139
	Prepaid Insurance		139
b.	Office Supplies Expenses	1,200
	Office Supplies		1,200
c.	Depreciation Expenses	400
	Accumulated Dep. - Computer		400
d.	Salaries Expenses	560
	Salary Payable		560
e.	Accounts Receivable	1,800
	Commission Earned		1,800
Closing Journal Entries
a.	Income Summary                     Dr.	7,749
	To Dep. Expenses - Computer		400
	To Salaries Expenses		2,160
	To Insurance Expense		139
	To Rent Expense		1,900
	To Office Supplies Expense		1,200
	To Repairs Expense		450
	To Telephone Expense		1,500
b.	Commision Earned                  Dr.	19,300
	To Income Summary		19,300
c.	Income Summary                     Dr.	11,551
	To Retained Earnings		11,551
d.	Retained Earnings                    Dr.	2,000
	To Dividends		2,000

Answer 2.
Cash					Accounts Receivable					Office Supplies
1-Apr	45,000	1,900	2-Apr		e.	1,800				3-Apr	1,600	1,200	b.
24-Apr	17,500	1,600	3-Apr
		2,500	10-Apr
		800	14-Apr
		800	28-Apr
		450	29-Apr
		1,500	30-Apr
		2,500	30-Apr
End. Bal	50,450				End. Bal	1,800				End. Bal	400
Prepaid Insurance					Computer					Accumulated Dep - Computer
10-Apr	2,500	139	a.		1-Apr	25,000						400	c.
End. Bal	2,361				End. Bal	25,000				End. Bal		400
Salaries Payable					Common Stock					Dividends
		560	d.				70,000	1-Apr		30-Apr	2,500
End. Bal		560			End. Bal		70,000			End. Bal	2,500
Commision Earned					Dep. Expenses - Computer					Salaries Expenses
		17,500	24-Apr		c.	400				14-Apr	800
		1,800	e.							28-Apr	800
										d.	560
End. Bal		19,300			End. Bal	400				End. Bal	2,160
Insurance Expense					Rent Expense					Office Supplies Expense
a.	139				2-Apr	1,900				b.	1,200
End. Bal	139				End. Bal	1,900				End. Bal	1,200
Repairs Expense					Telephone Expense
29-Apr	450				30-Apr	1,500
End. Bal	450				End. Bal	1,500

Answer 3.
Unadjusted Trial Balance
April 30, 2017
Particulars	Dr. Amt.	Cr. Amt.
Cash	50,450.00
Accounts Receivable	-
Office Supplies	1,600.00
Prepaid Insurance	2,500.00
Computer	25,000.00
Accumulated Dep - Computer		-
Salaries Payable		-
Common Stock		70,000.00
Dividends	2,500.00
Commision Earned		17,500.00
Dep. Expenses - Computer	-
Salaries Expenses	1,600.00
Insurance Expense	-
Rent Expense	1,900.00
Office Supplies Expense	-
Repairs Expense	450.00
Telephone Expense	1,500.00
Total	87,500.00	87,500.00
		-
Answer 4.
Adjusted Trial Balance
April 30, 2017
Particulars	Dr. Amt.	Cr. Amt.
Cash	50,450.00
Accounts Receivable	1,800.00
Office Supplies	400.00
Prepaid Insurance	2,361.00
Computer	25,000.00
Accumulated Dep - Computer		400.00
Salaries Payable		560.00
Common Stock		70,000.00
Dividends	2,500.00
Commision Earned		19,300.00
Dep. Expenses - Computer	400.00
Salaries Expenses	2,160.00
Insurance Expense	139.00
Rent Expense	1,900.00
Office Supplies Expense	1,200.00
Repairs Expense	450.00
Telephone Expense	1,500.00
Total	90,260.00	90,260.00
		-
Answer 5.
Income Statement
For The Month Ended April 30, 2017
Revenue
Commision Earned		19,300.00
Operating Expenses
Selling & Admn. Expenes
Dep. Expenses - Computer	400.00
Salaries Expenses	2,160.00
Insurance Expense	139.00
Rent Expense	1,900.00
Office Supplies Expense	1,200.00
Repairs Expense	450.00
Telephone Expense	1,500.00	7,749.00
Net Operating Income		11,551.00
Retained Earning Statement
As on April 30, 2017
Beginning Balance	-
Net Operating Income	11,551.00
Sub-total	11,551.00
Less: Dividends	2,500.00
Ending Balance	9,051.00
Answer e.
Balance Sheet
As on April 30, 2017
Assets
Current Assets
Cash	50,450.00
Accounts Receivable	1,800.00
Office Supplies	400.00
Prepaid Insurance	2,361.00	55,011.00
Property, Plant & Equipment
Computer	25,000.00
Accumulated Depreciation	(400.00)	24,600.00
Total Assets		79,611.00
Liabilities & Stockholders' Equity
Liabilities
Current Liabilities
Salaries Payable	-	560.00
Long Term Liabilities		-
Total Liabilities		560.00
Stockholders' Equity
Common Stock	70,000.00
Retained Earnings	9,051.00
Total Stockholders' Equity		79,051.00
Total Laibilities & Stockholders' Equity		79,611.00
Answer 7.
Post Closing Trial Balance
April 30, 2017
Particulars	Dr. Amt.	Cr. Amt.
Cash	50,450.00
Accounts Receivable	1,800.00
Office Supplies	400.00
Prepaid Insurance	2,361.00
Computer	25,000.00
Accumulated Depreciation		400.00
Salaries Payable		560.00
Common Stock		70,000.00
Retained Earnings		9,051.00
Total	80,011.00	80,011.00