Question

On April 1, 2017, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month. April 1 Nozomi invested $41,000 cash and computer equipment worth $35,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $1,700 cash for the first month’s (April) rent. 3 The company purchased $1,700 of office supplies for cash. 10 The company paid $2,300 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. 14 The company paid $1,700 cash for two weeks' salaries earned by employees. 24 The company collected $12,500 cash on commissions from airlines on tickets obtained for customers. 28 The company paid $1,700 cash for two weeks' salaries earned by employees. 29 The company paid $450 cash for minor repairs to the company's computer. 30 The company paid $950 cash for this month's telephone bill. 30 The company paid $2,100 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 $128) of one month’s insurance coverage has expired. At the end of the month, $500 of office supplies are still available. This month’s depreciation on the computer equipment is $500. Employees earned $550 of unpaid and unrecorded salaries as of month-end. The company earned $1,550 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.

Req 1 and 2

Req 3

Req 4 Adj Entries

Req 4 Adj Trial Bal

Req 5A

Req 5B

Req 5C

Req 6A

Req 6B GL

Req 7

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

ADVENTURE TRAVEL
Unadjusted Trial Balance
April 30, 2017
Account Title	Debit	Credit
101: Cash
106: Accounts receivable
124: Office supplies
128: Prepaid insurance
167: Computer equipment
168: Accumulated depreciation—Computer equipment
209: Salaries payable
307: Common stock
318: Retained earnings
319: Dividends
405: Commissions earned
612: Depreciation expense—Computer equipment
622: Salaries expense
637: Insurance expense
640: Rent expense
650: Office supplies expense
684: Repairs expense
688: Telephone expense
Total	$0	$0

Answer 1

Adventure Travel

1. Journal Entries to record the transactions:

1. Journal Entries
Date	Account Title and Explanation		Debit	Credit
1-Apr-17	Cash		$41,000
	Equipment		$35,000
	Common Stock			$76,000
	(To record issue of 1,000 common shares at $65 each)
2-Apr
	Rent Expense		$1,700
	Cash			$1,700
	(To record payment of rent)
3-Apr	Supplies		$1,700
	Cash			$1,700
	(To record purchase of supplies)
4-Apr	Prepaid Insurance		$2,300
	Cash			$2,300
	(To record insurance premium for 1 year)
14-Apr	Salaries Expense		$1,700
	Cash			$1,700
	(To record payment of salaries)
24-Apr	Cash		$12,500
	Commissions Earned			$12,500
28-Apr	Salaries Expense		$1,700
	Cash			$1,700
	(To record payment of salaries)
29-Apr	Repairs Expense		$450
	Cash			$450
	(To record payment towards computer repairs)
30-Apr	Telephone Expense		$950
	Cash			$950
	(To record payment of telephone bill)
30-Apr	Dividends		$2,100
	Cash			$2,100
	(To record dividends paid)

	Adjusting Entries:
Date	Account Titles and Explanation		Debit	Credit
30-Apr	Insurance Expense		$128
	Prepaid Insurance			$128
	(To record insurance expense for Apr 11 - Apr 30)
30-Apr	Supplies Expense		$1,200
	Supplies			$1,200
	(To record cost of supplies used)
30-Apr	Depreciation Expense - Computer Equipment		$500
	Accumulated Depreciation - Computer Equipment			$500
	(To record depreciation expense)
30-Apr	Salaries Expense		$550
	Salaries Payable			$550
	(To record salaries earned but unpaid)
30-Apr	Accounts Receivable		$1,550
	Commission Earned			$1,550
	(To record commission earned but not billed and collected)

Ledger Accounts –

Adventure Travel
Unadjusted Trial Balance
for the month ended April 30, 2017
Account Titles		Debit	Credit
Cash		$40,900
Prepaid Insurance		$2,172
Accounts Receivable		$1,550
Office Supplies		$500
Computer Equipment		$35,000
Accumulated Depreciation - Computer Equipment			$500
Commission Earned			$14,050
Depreciation Expense - Computer Equipment		$500
Office Supplies Expense		$1,200
Rent Expense		$1,700
Insurance Expense		$128
Salaries Expense		$3,950
Telephone Expense		$950
Repairs Expense		$450
Dividends		$2,100
Salaries Payable			$550
Common Stock			$76,000
Totals		$91,100	$91,100

Adventure Travel
Income Summary
for the month ended April 30,2017
Commissions Earned		$14,050
Expenses-
Rent Expense	$1,700
Insurance Expense	$128
Salaries Expense	$3,950
Depreciation Expense	$500
Repairs Expense	$450
Telephone Expense	$950
Office Supplies Expense	$1,200
Total Expenses		$8,878
Net Income		$5,172
statement of Retained Earnings
Net Income		$5,172
Dividends		($2,100)
Retained Earnings, April 30, 2017		$3,072

Ledger Accounts