Problem - On April 1, 2009, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company's first month:
April 1 Nozomi invested $29,000 cash and computer equipment worth $27,000 in the company in exchange for its common stock.
April 2 The company rented furnished office space by paying $1,700 cash for the first month's (April) rent.
April 3 The company purchased $1,600 of office supplies for cash.
April 10 The company paid $2,600 cash for the premium on a 12-month insurance policy. Coverage begins on April 11.
April 14 The company paid $2,900 cash for two weeks' salaries earned by employees.
April 24 The company collected $11,000 cash on commissions from airlines on tickets obtained for customers.
April 28 The company paid another $2,700 cash for two weeks' salaries earned by employees.
April 29 The company paid $450 cash for minor repairs to the company's computer.
April 30 The company paid $850 cash for this month's telephone bill.
April 30 The company paid $800 cash for 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
|
|
|
Requirement 1: Prepare journal entries to record the April transactions. The company records prepaid and unearned items in balance sheet accounts.
Requirement 2: Prepare an unadjusted trial balance as of April 30.
Requirement 3: Use the following information to journalize and post adjusting entries for the month.
a. Two-thirds of one month's insurance coverage has expired.
b. At the end of the month, $1,000 of office supplies are still available.
c. This month's depreciation on the computer equipment is $500.
d. Employees earned $520 of unpaid and unrecorded salaries as of month-end.
e. The company earned $3,050 of commissions that are not yet billed at month-end.
Requirement 4: (a) Prepare the income statement for the month of April.
(b) Prepare the statement of retained earnings for the month of April.
(c) Prepare the balance sheet as of April 30, 2009.
Requirement 5: Prepare journal entries to close the temporary accounts.
i. Closing entry for Revenue:
ii. Closing entry for Expense:
iii. Closing entry for Income Summary:
iv. Closing entry for Withdrawals:
Requirement 6: Prepare a post-closing trial balance.