On April 1, Jiro Nozomi created a new travel agency, AdventureTravel. The following transactions occurred during the company’sfirst month. April 1 Nozomi invested $37,000 cash and computerequipment worth $40,000 in the company in exchange for commonstock.
2 The company rented furnished office space by paying $1,900cash for the first month’s (April) rent.
3 The company purchased $1,600 of office supplies for cash.
10 The company paid $2,200 cash for the premium on a 12-monthinsurance policy. Coverage begins on April 11.
14 The company paid $1,500 cash for two weeks' salaries earnedby employees.
24 The company collected $17,500 cash for commissionsrevenue.
28 The company paid $1,500 cash for two weeks' salaries earnedby employees.
29 The company paid $450 cash for minor repairs to the company'scomputer.
30 The company paid $1,450 cash for this month's telephonebill.
30 The company paid $2,300 cash in dividends.
The company's chart of accounts follows:
101 Cash 405 Commissions Revenue 106 Accounts Receivable 612Depreciation Expense—Computer Equip. 124 Office Supplies 622Salaries Expense 128 Prepaid Insurance 637 Insurance Expense 167Computer Equipment 640 Rent Expense 168 AccumulatedDepreciation—Computer Equip. 650 Office Supplies Expense 209Salaries Payable 684 Repairs Expense 307 Common Stock 688 TelephoneExpense 318 Retained Earnings 901 Income Summary 319 Dividends
Use the following information:
Prepaid insurance of $122 has expired this month.
At the end of the month, $600 of office supplies are stillavailable.
This month’s depreciation on the computer equipment is $500.
Employees earned $500 of unpaid and unrecorded salaries as ofmonth-end.
The company earned $1,650 of commissions that are not yet billedat month-end.
Required: 1. & 2. Prepare journal entries to record thetransactions for April and post them to the ledger accounts inRequirement 6b.
The company records prepaid and unearned items in balance sheetaccounts.
3. Using account balances from Requirement 6b, prepare anunadjusted trial balance as of April 30. 4. Journalize theadjusting entries for the month and prepare the adjusted trialbalance. 5a. Prepare the income statement for the month of April30. 5b. Prepare the statement of retained earnings for the month ofApril 30. 5c. Prepare the balance sheet at April 30. 6a. Preparejournal entries to close the temporary accounts and then post toRequirement 6b. 6b. Post the journal entries to the ledger. 7.Prepare a post-closing trial balance.
