On April 1, 2017, Jiro Nozomi created a new travel agency, Adventure Travel. The
ID: 2607729 • Letter: O
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.
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.
Explanation / Answer
Answer:
1&2
ADVENTURE TRAVEL
General Journal
Date
Account Titles
Debit
Credit
Transactions for April (Part 2):
1-Apr
Cash
30,000
Computer Equipment
20,000
J. Nozomi, Capital
50,000
Owner invested in the business.
2
Rent Expense
1,800
Cash
1,800
Paid one month's rent
3
Office Supplies
1,000
Cash
1,000
Acquired office supplies
10
Prepaid Insurance
2,400
Cash
2,400
Paid 12 months' premium in advance.
14
Salaries Expense
1,600
Cash
1,600
Paid two weeks' salaries.
24
Cash
8,000
Commissions Earned
8,000
Collected commissions from airlines.
28
Salaries Expense
1,600
Cash
1,600
Paid two weeks' salaries.
29
Repairs Expense
350
Cash
350
Repaired the computer.
30
Telephone Expense
750
Cash
750
Paid the telephone bill.
30
J. Nozomi, Withdrawals
1,500
Cash
1,500
Owner withdrew cash.
3. Using account balances from part 6.2, prepare an unadjusted trial balance
ADVENTURE TRAVEL
Unadjusted Trial Balance
30-Apr-17
Account Titles
Debits
Credits
Cash
$27,000
Accounts receivable
-
Office supplies
1,000
Prepaid insurance
2,400
Computer equipment
20,000
Accumulated depreciation - computer equipment
$0
Salaries payable
-
J. Nozomi, Capital
-
50,000
J. Nozomi, Withdrawals
1,500
Commissions earned
8,000
Depreciation expense - computer equipment
-
Salaries expense
3,200
Insurance expense
-
Rent expense
1,800
Office supplies expense
-
Repairs expense
350
Telephone expense
750
Totals
$58,000
58000
4
Adjusting Entries (Part 4):
30-Apr
Insurance Expense
133
Prepaid Insurance
133
To record expired insurance.
30
Office Supplies Expense
400
Office Supplies
400
To record cost of supplies used.
30
Depreciation Expense - Computer Equipment
500
Accumulated Depreciation - Computer Equipment
500
To record depreciation.
30
Salaries Expense
420
Salaries Payable
420
To record accrued salaries.
30
Accounts Receivable
1,750
Commissions Earned
1,750
To record accrued commissions.
Note:
As this question has multiple question so as per guideline I have answered first 4 questions
ADVENTURE TRAVEL
General Journal
Date
Account Titles
Debit
Credit
Transactions for April (Part 2):
1-Apr
Cash
30,000
Computer Equipment
20,000
J. Nozomi, Capital
50,000
Owner invested in the business.
2
Rent Expense
1,800
Cash
1,800
Paid one month's rent
3
Office Supplies
1,000
Cash
1,000
Acquired office supplies
10
Prepaid Insurance
2,400
Cash
2,400
Paid 12 months' premium in advance.
14
Salaries Expense
1,600
Cash
1,600
Paid two weeks' salaries.
24
Cash
8,000
Commissions Earned
8,000
Collected commissions from airlines.
28
Salaries Expense
1,600
Cash
1,600
Paid two weeks' salaries.
29
Repairs Expense
350
Cash
350
Repaired the computer.
30
Telephone Expense
750
Cash
750
Paid the telephone bill.
30
J. Nozomi, Withdrawals
1,500
Cash
1,500
Owner withdrew cash.
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