Problem 3-6A Applying the accounting cycle LO P1, P2, P3, P4, P5 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 $31,000 cash and computer equipment worth $30,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $2,200 cash for the first month's (April) rent 3 The company purchased $1,300 of office supplies for cash. 10 The company paid $2,900 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. 14 The company paid $1,000 cash for two weeks salaries earned by employees. 24 The company collected $21,000 cash on commissions from airlines on tickets obtained for customers. 28 The company paid $1,e00 cash for two weeks' salaries earned by employees. 29 The company paid $400 cash for minor repairs to the company's computer 30 The company paid $1,250 cash for this month's telephone bi11 30 The company paid $1,600 cash in dividends. The company's chart of accounts follows: 101 Cash 106 Accounts Receivable 124 Office Supplies 128 Prepaid Insurance 167 Computer Equipment 168 Accumulated Depreciation-Computer Equip 209 Salaries Payable 307 Common Stock 318 Retained Earnings 319 Dividends 405 Commissions Earned 612 Depreciation Expense-Computer Equip 622 Salaries Expense 637 Insurance Expense 640 Rent Expense 650 Office Supplies Expense 684 Repairs Expense 688 Telephone Expense 901 Income Summary Use the following information a. Two-thirds (or $161) of one month's insurance coverage has expired b. At the end of the month, $700 of office supplies are still available c. This month's depreciation on the computer equipment is $500 d. Employees earned $350 of unpaid and unrecorded salaries as of month-end e. The company earned $2,300 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. 0 Date General Journal Debit Credit April 01 Cash 31,000 Computer equipment Common stock 30,000 61,000 April 02 Rent expense 2,200 Cash 2,200 April 03 Office supplies 1,300 Cash 1,300 4 April 10 Prepaid insurance 2,900 Cash 2,900 April 14 Salaries expense 1,000 Cash 1,000 April 24 Cash 21,000 Commissions earned 21,000 April 28 Salaries expense 1,000 Cash 1,000 April 29 Repairs expense 400 Cash 400 April 30Telephone expense 1,250 Cash 1,250 Apri 30 Dividends 1,600 Cash 1,600 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 Journalize the adjusting entries for the month, and then post to the ledger on Req 6B tab, using April 30 Adj. as the date View transaction listView journal entry worksheet 0 Transaction General Journal Debit Credit Insurance expense 161 Prepaid insurance 161 Office supplies expense 600 Office supplies 600 Depreciation expense-Computer equip 500 Accumulated depreciation-Computer equip 500 4 Salaries expense 350 Salaries payable 350 Accounts receivable 2,300 Commissions earned 2,300 Using adjusted account balances from Requirement 6b, prepare an adjusted trial balance as of April 30. (Do not round intermediate calculations.) ADVENTURE TRAVEL Adjusted 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 30r: 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 Prepare the income statement for the month of April 30, 2017 ADVENTURE TRAVEL Income Statement For Month Ended April 30, 2017 Revenues Commissions earned Expenses: Depreciation expense-Computer equip Salaries expense Insurance expense 500 Rent expense Office supplies expense Telephone expense Repairs expense 500 Total expenses Net income (500) Prepare the statement of retained earnings for the month of April 30, 2017 ADVENTURE TRAVEL Statement of Retained Earnings For Month Ended April 30, 2017 Retained earnings, April 1, 2017 Add: Net income 15,839 15,839 Less: Dividends Retained earnings. April 30, 2017 15,839 Prepare the balance sheet at April 30, 2017 ADVENTURE TRAVEL Balance Sheet April 30, 2017 Assets Cash Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated depreciation-Computer equip Total assets Liabilities Salaries payable Equity ommon stock Retained earnings Total equity Total liabilities and equity Prepare journal entries to close the temporary accounts and then post to Req 6B General Ledger, using April 30 Close as the date View transaction list Journal entry worksheet 4 Record the entry to close revenue account(s). Note: Enter debits before credits Date General Journal Debit Credit April 30 Journal entry worksheet 4 Record the entry to close expense account(s). Note: Enter debits before credits. Date General Journal Debit Credit April 30 Journal entry worksheet 4 Record the entry to close income summary Note: Enter debits before credits. Date General Journal Debit Credit April 30 Journal entry worksheet 4 Record the entry to close the withdrawals account. Note: Enter debits before credits. Date General Journal Debit Credit April 30 General Ledger accounts Cash Accounts Receivable Date Debit Credit Balance Date Debit Credit Balance April 1 April 2 April 3 April 10 April 14 April 24 April 28 April 29 April 30 Tel April 30 Div 1000 April 30 Adj 28,800 27,500 24,600 23,600 44,600 43,600 43,200 41,950 40,350 31,000 2,300 2,300 2,200 1,300 2,900 1,000 21,000 1,000 400 1,250 1,600 Office Supplies Debit Prepaid Insurance Date Credit Balance Date Debit Credit Balance April 3 April 30 Adj 300 April 10 700April 30 Adj 2,900 2,739 1,300 2,900 600 161 Computer Equipment Debit Accumulated Depreciation-Computer equipment Date Credit Balance Date Debit Credit Balance April 1 30,000 30,000 April 30 Adj 500 500 Salaries Payable Common Stock Date Debit Credit Balance Date Debit Credit Balance April 30 Adj 350 350 Retained Earnings Debit Dividends Date Credit Balance Date Debit Credit Balance Commissions earned Depreciation Expense-Computer Equipment Date Debit Credit Balance Date Debit Credit Balance Salaries Expense Insurance Expense Debit Date Debit Credit Balance Date Credit Balance Rent Expense Office Supplies Expense Credit Date Debit Credit Balance Date Debit Balance Repairs Expense Debit Telephone Expense Debit Date Credit Balance Date Credit Balance Income Summary Debit Date Balance K Req 6A Req 7> Prepare a post-closing trial balance. ADVENTURE TRAVEL Post-Closing Trial Balance April 30, 2017 Account Title Debit Credit Totals 0 S Req 6B GL Req 7 Problem 3-6A Applying the accounting cycle LO P1, P2, P3, P4, P5 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 $31,000 cash and computer equipment worth $30,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $2,200 cash for the first month's (April) rent 3 The company purchased $1,300 of office supplies for cash. 10 The company paid $2,900 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. 14 The company paid $1,000 cash for two weeks salaries earned by employees. 24 The company collected $21,000 cash on commissions from airlines on tickets obtained for customers. 28 The company paid $1,e00 cash for two weeks' salaries earned by employees. 29 The company paid $400 cash for minor repairs to the company's computer 30 The company paid $1,250 cash for this month's telephone bi11 30 The company paid $1,600 cash in dividends. The company's chart of accounts follows: 101 Cash 106 Accounts Receivable 124 Office Supplies 128 Prepaid Insurance 167 Computer Equipment 168 Accumulated Depreciation-Computer Equip 209 Salaries Payable 307 Common Stock 318 Retained Earnings 319 Dividends 405 Commissions Earned 612 Depreciation Expense-Computer Equip 622 Salaries Expense 637 Insurance Expense 640 Rent Expense 650 Office Supplies Expense 684 Repairs Expense 688 Telephone Expense 901 Income Summary Use the following information a. Two-thirds (or $161) of one month's insurance coverage has expired b. At the end of the month, $700 of office supplies are still available c. This month's depreciation on the computer equipment is $500 d. Employees earned $350 of unpaid and unrecorded salaries as of month-end e. The company earned $2,300 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. 0 Date General Journal Debit Credit April 01 Cash 31,000 Computer equipment Common stock 30,000 61,000 April 02 Rent expense 2,200 Cash 2,200 April 03 Office supplies 1,300 Cash 1,300 4 April 10 Prepaid insurance 2,900 Cash 2,900 April 14 Salaries expense 1,000 Cash 1,000 April 24 Cash 21,000 Commissions earned 21,000 April 28 Salaries expense 1,000 Cash 1,000 April 29 Repairs expense 400 Cash 400 April 30Telephone expense 1,250 Cash 1,250 Apri 30 Dividends 1,600 Cash 1,600 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 Journalize the adjusting entries for the month, and then post to the ledger on Req 6B tab, using April 30 Adj. as the date View transaction listView journal entry worksheet 0 Transaction General Journal Debit Credit Insurance expense 161 Prepaid insurance 161 Office supplies expense 600 Office supplies 600 Depreciation expense-Computer equip 500 Accumulated depreciation-Computer equip 500 4 Salaries expense 350 Salaries payable 350 Accounts receivable 2,300 Commissions earned 2,300 Using adjusted account balances from Requirement 6b, prepare an adjusted trial balance as of April 30. (Do not round intermediate calculations.) ADVENTURE TRAVEL Adjusted 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 30r: 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 Prepare the income statement for the month of April 30, 2017 ADVENTURE TRAVEL Income Statement For Month Ended April 30, 2017 Revenues Commissions earned Expenses: Depreciation expense-Computer equip Salaries expense Insurance expense 500 Rent expense Office supplies expense Telephone expense Repairs expense 500 Total expenses Net income (500) Prepare the statement of retained earnings for the month of April 30, 2017 ADVENTURE TRAVEL Statement of Retained Earnings For Month Ended April 30, 2017 Retained earnings, April 1, 2017 Add: Net income 15,839 15,839 Less: Dividends Retained earnings. April 30, 2017 15,839 Prepare the balance sheet at April 30, 2017 ADVENTURE TRAVEL Balance Sheet April 30, 2017 Assets Cash Accounts receivable Office supplies Prepaid insurance Computer equipment Accumulated depreciation-Computer equip Total assets Liabilities Salaries payable Equity ommon stock Retained earnings Total equity Total liabilities and equity Prepare journal entries to close the temporary accounts and then post to Req 6B General Ledger, using April 30 Close as the date View transaction list Journal entry worksheet 4 Record the entry to close revenue account(s). Note: Enter debits before credits Date General Journal Debit Credit April 30 Journal entry worksheet 4 Record the entry to close expense account(s). Note: Enter debits before credits. Date General Journal Debit Credit April 30 Journal entry worksheet 4 Record the entry to close income summary Note: Enter debits before credits. Date General Journal Debit Credit April 30 Journal entry worksheet 4 Record the entry to close the withdrawals account. Note: Enter debits before credits. Date General Journal Debit Credit April 30 General Ledger accounts Cash Accounts Receivable Date Debit Credit Balance Date Debit Credit Balance April 1 April 2 April 3 April 10 April 14 April 24 April 28 April 29 April 30 Tel April 30 Div 1000 April 30 Adj 28,800 27,500 24,600 23,600 44,600 43,600 43,200 41,950 40,350 31,000 2,300 2,300 2,200 1,300 2,900 1,000 21,000 1,000 400 1,250 1,600 Office Supplies Debit Prepaid Insurance Date Credit Balance Date Debit Credit Balance April 3 April 30 Adj 300 April 10 700April 30 Adj 2,900 2,739 1,300 2,900 600 161 Computer Equipment Debit Accumulated Depreciation-Computer equipment Date Credit Balance Date Debit Credit Balance April 1 30,000 30,000 April 30 Adj 500 500 Salaries Payable Common Stock Date Debit Credit Balance Date Debit Credit Balance April 30 Adj 350 350 Retained Earnings Debit Dividends Date Credit Balance Date Debit Credit Balance Commissions earned Depreciation Expense-Computer Equipment Date Debit Credit Balance Date Debit Credit Balance Salaries Expense Insurance Expense Debit Date Debit Credit Balance Date Credit Balance Rent Expense Office Supplies Expense Credit Date Debit Credit Balance Date Debit Balance Repairs Expense Debit Telephone Expense Debit Date Credit Balance Date Credit Balance Income Summary Debit Date Balance K Req 6A Req 7> Prepare a post-closing trial balance. ADVENTURE TRAVEL Post-Closing Trial Balance April 30, 2017 Account Title Debit Credit Totals 0 S Req 6B GL Req 7