On April 1, 2017, Jiro Nozomi created a new travel agency,Adventure Travel. The following transactions occurred during thecompany’s first month.
| April | | 1 | | Nozomi invested $41,000 cash and computer equipment worth$30,000 in the company in exchange for common stock. |
| | 2 | | The company rented furnished office space by paying $2,700 cashfor the first month’s (April) rent. |
| | 3 | | The company purchased $1,400 of office supplies for cash. |
| | 10 | | The company paid $2,800 cash for the premium on a 12-monthinsurance policy. Coverage begins on April 11. |
| | 14 | | The company paid $900 cash for two weeks' salaries earned byemployees. |
| | 24 | | The company collected $22,500 cash on commissions from airlineson tickets obtained for customers. |
| | 28 | | The company paid $900 cash for two weeks' salaries earned byemployees. |
| | 29 | | The company paid $400 cash for minor repairs to the company'scomputer. |
| | 30 | | The company paid $1,400 cash for this month's telephonebill. |
| | 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 $156) of one month’s insurance coverage hasexpired.
- At the end of the month, $500 of office supplies are stillavailable.
- This month’s depreciation on the computer equipment is$500.
- Employees earned $370 of unpaid and unrecorded salaries as ofmonth-end.
- The company earned $2,300 of commissions that are not yetbilled at month-end.
Required:
1. & 2. Prepare journalentries to record the transactions for April and post them to theledger accounts in Requirement 6b. The company records prepaid andunearned 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 forthe month and prepare the adjusted trial balance.
5a. Prepare the income statement for the month ofApril 30, 2017.
5b. Prepare the statement of retained earnings forthe month of April 30, 2017.
5c. Prepare the balance sheet at April 30,2017.
6a. Prepare journal entries to close the temporaryaccounts and then post to Requirement 6b.
6b. Post the journal entries to the ledger.
7. Prepare a post-closing trial balance.
