On April 1, 2017, Jiro Nozomi created a new travel agency, Adventure Travel. The

Question

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

The company's chart of accounts follows:

Use the following information:

Two-thirds (or $167) of one month’s insurance coverage has expired.

At the end of the month, $700 of office supplies are still available.

This month’s depreciation on the computer equipment is $500.

Employees earned $410 of unpaid and unrecorded salaries as of month-end.

The company earned $1,650 of commissions that are not yet billed at month-end.

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.

April 1 Nozomi invested $41,000 cash and computer equipment worth $25,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $2,600 cash for the first month’s (April) rent. 3 The company purchased $2,000 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 $1,300 cash for two weeks' salaries earned by employees. 24 The company collected $23,500 cash on commissions from airlines on tickets obtained for customers. 28 The company paid $1,300 cash for two weeks' salaries earned by employees. 29 The company paid $400 cash for minor repairs to the company's computer. 30 The company paid $1,350 cash for this month's telephone bill. 30 The company paid $2,000 cash in dividends.

Explanation / Answer

Answer 1 & 4 & 6. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1-Apr Cash                                              Dr.      41,000 Computer                                   Dr.      25,000    To Common Stock      66,000 2-Apr Rent Expenses                          Dr.         2,600    To Cash         2,600 3-Apr Office Suplies                            Dr.         2,000    To Cash         2,000 10-Apr Prepaid Insurance                    Dr.         3,000    To Cash         3,000 14-Apr Salaries Expenses                     Dr.         1,300    To Cash         1,300 24-Apr Cash                                              Dr.      23,500    To Commission Earned      23,500 28-Apr Salaries Expenses                     Dr.         1,300    To Cash         1,300 29-Apr Repairs Expenses                      Dr.            400    To Cash            400 30-Apr Telephone Expenses               Dr.         1,350    To Cash         1,350 30-Apr Dividends                                     Dr.         2,000    To Cash         2,000 Adjusting Entry a. Insurance Expenses                 Dr.            167    To Prepaid Insurance            167 b. Office Supplies Expenses      Dr.         1,300    To Office Supplies         1,300 c. Depreciation Expenses           Dr.            500    To Accumulated Dep. - Computer            500 d. Salaries Expenses                     Dr.            410    To Salary Payable            410 e. Accounts Receivable               Dr.         1,650    To Commission Earned         1,650 Closing Journal Entries a. Income Summary                     Dr.         9,327 To Dep. Expenses - Computer            500 To Salaries Expenses         3,010 To Insurance Expense            167 To Rent Expense         2,600 To Office Supplies Expense         1,300 To Repairs Expense            400 To Telephone Expense         1,350 b. Commision Earned                  Dr.      25,150    To Income Summary      25,150 c. Income Summary                     Dr.      15,823    To Retained Earnings      15,823 d. Retained Earnings                    Dr.         2,000    To Dividends         2,000 Answer 2. Cash Accounts Receivable Office Supplies 1-Apr       41,000          2,600 2-Apr e.          1,650 3-Apr          2,000          1,300 b. 24-Apr       23,500          2,000 3-Apr          3,000 10-Apr          1,300 14-Apr          1,300 28-Apr             400 29-Apr          1,350 30-Apr          2,000 30-Apr End. Bal       50,550 End. Bal          1,650 End. Bal             700 Prepaid Insurance Computer Accumulated Dep - Computer 10-Apr          3,000             167 a. 1-Apr       25,000             500 c. End. Bal          2,833 End. Bal       25,000 End. Bal             500 Salaries Payable Common Stock Dividends             410 d.       66,000 1-Apr 30-Apr          2,000 End. Bal             410 End. Bal       66,000 End. Bal          2,000 Commision Earned Dep. Expenses - Computer Salaries Expenses       23,500 24-Apr c.             500 14-Apr          1,300          1,650 e. 28-Apr          1,300 d.             410 End. Bal       25,150 End. Bal             500 End. Bal          3,010 Insurance Expense Rent Expense Office Supplies Expense a.             167 2-Apr          2,600 b.          1,300 End. Bal             167 End. Bal          2,600 End. Bal          1,300 Repairs Expense Telephone Expense 29-Apr             400 30-Apr          1,350 End. Bal             400 End. Bal          1,350 Answer 3. Unadjusted Trial Balance April 30, 2017 Particulars Dr. Amt. Cr. Amt. Cash    50,550.00 Accounts Receivable                   -   Office Supplies      2,000.00 Prepaid Insurance      3,000.00 Computer    25,000.00 Accumulated Dep - Computer                   -   Salaries Payable                   -   Common Stock    66,000.00 Dividends      2,000.00 Commision Earned    23,500.00 Dep. Expenses - Computer                   -   Salaries Expenses      2,600.00 Insurance Expense                   -   Rent Expense      2,600.00 Office Supplies Expense                   -   Repairs Expense          400.00 Telephone Expense      1,350.00 Total    89,500.00    89,500.00                   -   Answer 4. Adjusted Trial Balance April 30, 2017 Particulars Dr. Amt. Cr. Amt. Cash    50,550.00 Accounts Receivable      1,650.00 Office Supplies          700.00 Prepaid Insurance      2,833.00 Computer    25,000.00 Accumulated Dep - Computer          500.00 Salaries Payable          410.00 Common Stock    66,000.00 Dividends      2,000.00 Commision Earned    25,150.00 Dep. Expenses - Computer          500.00 Salaries Expenses      3,010.00 Insurance Expense          167.00 Rent Expense      2,600.00 Office Supplies Expense      1,300.00 Repairs Expense          400.00 Telephone Expense      1,350.00 Total    92,060.00    92,060.00                   -   Answer 5. Income Statement For The Month Ended April 30, 2017 Revenue Commision Earned    25,150.00 Operating Expenses Selling & Admn. Expenes Dep. Expenses - Computer          500.00 Salaries Expenses      3,010.00 Insurance Expense          167.00 Rent Expense      2,600.00 Office Supplies Expense      1,300.00 Repairs Expense          400.00 Telephone Expense      1,350.00      9,327.00 Net Operating Income    15,823.00 Retained Earning Statement As on April 30, 2017 Beginning Balance                   -   Net Operating Income    15,823.00 Sub-total    15,823.00 Less: Dividends      2,000.00 Ending Balance    13,823.00 Answer e. Balance Sheet As on April 30, 2017 Assets Current Assets Cash    50,550.00 Accounts Receivable      1,650.00 Office Supplies          700.00 Prepaid Insurance      2,833.00    55,733.00 Property, Plant & Equipment Computer    25,000.00 Accumulated Depreciation       (500.00)    24,500.00 Total Assets    80,233.00 Liabilities & Stockholders' Equity Liabilities Current Liabilities Salaries Payable                   -            410.00 Long Term Liabilities                   -   Total Liabilities          410.00 Stockholders' Equity Common Stock    66,000.00 Retained Earnings    13,823.00 Total Stockholders' Equity    79,823.00 Total Laibilities & Stockholders' Equity    80,233.00 Answer 7. Post Closing Trial Balance April 30, 2017 Particulars Dr. Amt. Cr. Amt. Cash    50,550.00 Accounts Receivable      1,650.00 Office Supplies          700.00 Prepaid Insurance      2,833.00 Computer    25,000.00 Accumulated Depreciation          500.00 Salaries Payable          410.00 Common Stock    66,000.00 Retained Earnings    13,823.00 Total    80,733.00    80,733.00

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