On April 1, 2015, Jiro Nozomi created a new travel agency, Adventure Travel. The

Question

On April 1, 2015, 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 $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 The company's chart of accounts follows 101 Cash 106 Accounts Receivable 124 Office Supplies 128 Prepaid Insurance 167 Computer Equipment 168 Accumulated Depreciation-Computer Equip 209 Salaries Payable 307 Common Stock 318 Retained Earnings 319 Dividends 405 Commissions Earned 612 Depreciation Expense-Computer Equip 622 Salaries Expense 637 Insurance Expense 640 Rent Expense 650 Office Supplies Expense 684 Repairs Expense 688 Telephone Expense 901 Income Summary Use the following information in Part 4: a. Two-thirds (or $133) of one month's insurance coverage has expired b. At the end of the month, $600 of office supplies are still available. c. This month's depreciation on the computer equipment is $500. d. Employees earned $420 of unpaid and unrecorded salaries as of month-end e. The company earned $1,750 of commissions that are not yet billed at month-end

Explanation / Answer

Transaction No.

General Journal

Debit

Credit

a)

637

Insurance Expense

133

128

Prepaid Insurance

133

b)

650

Office Supplies Expense

400

124

Office Supplies

400

c)

612

Depreciation Expense – Computer Equip.

500

168

Accumulated Depreciation – Computer Equip.

500

d)

622

Salaries Expense

420

209

Salaries payable

420

e)

106

Accounts receivable

1750

405

Commissions Earned

1750

Adjusted Trial Balance

Chart of Accountsof AccAAunts

Account TitleAAcount Title

Debit
DDebit($)

Credit

Credit

101

Cash

27,000

(30000-1800-1000 - 2400-1600+8000-1600-350-750-1500)

106

Accounts receivable

1,750

124

Office Supplies

600

128

Prepaid Insurance

2,267

167

Computer equipment

20,000

168

Accumulated depreciation - Computer equipment

500

209

Salaries payable

420

307

Common Stock

50,000

318

Retained earnings

319

Dividends

1,500

405

Commission earned

9,750

612

Depreciation expense - Computer equipment

500

622

Salaries expense

3,620

(1600+1600+420)

637

Insurance expense

133

640

Rent expense

1,800

650

Office supplies expense

400

684

Repairs expense

350

688

Telephone expense

750

Total

60,670

60,670

Transaction No.

General Journal

Debit

Credit

a)

637

Insurance Expense

133

128

Prepaid Insurance

133

b)

650

Office Supplies Expense

400

124

Office Supplies

400

c)

612

Depreciation Expense – Computer Equip.

500

168

Accumulated Depreciation – Computer Equip.

500

d)

622

Salaries Expense

420

209

Salaries payable

420

e)

106

Accounts receivable

1750

405

Commissions Earned

1750

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