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 $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.

  
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.

Using adjusted account balances from Requirement 6b, prepare an adjusted trial balance as of April 30.

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

Explanation / Answer

Journal entries

Ledger accounts

Date Particulars L.F Amount ($) Amount ($) Apr-01 Cash 30,000 Computer equipment 20,000 Common Stock 50,000 (For cash and equipment invested) Apr-02 Rent Expense 1,800 cash 1,800 (for rent paid for april) Apr-03 Office Supplies 1,000 cash 1,000 (For office supplies purchased) Apr-10 Prepaid Insurance 2,400 Cash 2,400 (For insurance premium for 12 months paid in advance) Apr-14 Salaries expense 1,600 cash 1,600 (for 2 weeks salaries paid) Apr-24 Cash 8,000 Commissions earned 8,000 (For cash received for commissions earned) Apr-28 Salaries expense 1,600 cash 1,600 (for 2 weeks salaries paid) Apr-29 Repairs Expense 350 cash 350 (for cash paid for computer repair) Apr-30 Telephone expense 750 cash 750 (For cash paid for telephone expense) Apr-30 Dividends 1,500 cash 1,500 (For cash paid for dividends) Adjusting Entries: a. Apr-30 Insurance expense 133 Prepaid Insurance 133 (For Insurnace for 30 days expired) b. Apr-30 Supplies Expense 400 Office Supplies 400 (for office supplies expensed) c. Apr-30 Depreciation exp-Office Equipment 500 Accumulated dep-Office Equipment 500 (For equipment depreciated) d. Apr-30 Salaries expense 420 Salaries payable 420 (For salaries earned) e. Apr-30 Account Receivable 1,750 Commission Earned 1,750 (for commission eraned but not billed) Closing Entries Date Particulars L.F Debit Credit $ $ Apr-30 Commission earned 9,750    Income summary 9,750 (For income closing balances recorded) Apr-30 Income summary 7,553 Salary Expense 3,620 Rent Expense 1,800 Insurance expense 133 Supplies expense 400 Telephone expense 750 Repair expense 350 Depreciation-Equipment 500 (For expenses closing balances recorded) Apr-30 Income summary 2,197 Retained Earnings 2,197 (For income summary close to retained earnings account) Apr-30 Retained earnings 1,500    Dividends 1,500 (For dividends transferred to retained earnings account)

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