Problem 3-6A Applying the accounting cycle LO P1, P2, P3, P4, P5 [The following information applies to the questions displayed below.) On April 1, 2015, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company's first month. April 1 Nozomi invested $35,000 cash and computer equipment worth $20,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $2,000 cash for the first month's (April) rent. 3 The company purchased $1,100 of office supplies for cash. 10 The company paid $3,000 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. 14 The company paid $1,600 cash for two weeks' salaries earned by employees. 24 The company collected $10,500 cash on commissions from airlines on tickets obtained for customers. 28 The company paid $1,600 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 $1,450 cash for this month's telephone bill. 30 The company paid $2,200 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 in Part 4: a. Two-thirds (or $167) of one month's insurance coverage has expired. b. At the end of the month, $500 of office supplies are still available. C. This month's depreciation on the computer equipment is $400. d. Employees earned $540 of unpaid and unrecorded salaries as of month-end. e. The company earned $1,600 of commissions that are not yet billed at month-end. Problem 3-6A Part 1 & 2 Required: 1. The general ledger and all the necessary accounts are provided in Part 6.2. Post all journal entries, adjusting entries and closing entries to the general ledger given in Part 6.2 2. Prepare journal entries to record the transactions for April and post them to the ledger accounts in Part 6.2. The company records prepaid and unearned items in balance sheet accounts. View transaction list Journal entry worksheet 1 2 3 4 5 6 7 8 9 10 Nozomi invested $35,000 cash and computer equipment worth $20,000 in the company in exchange for common stock. Note: Enter debits before credits. General Journal Debit Credit Date April 01 Record entry Clear entry View general journal 1 Nozomi invested $35,000 cash and computer equipment worth $20,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $2,000 cash for the first month's (April) rent. 3 The company purchased $1,100 of office supplies for cash. 4 The company paid $3,000 cash for the premium on a 12- month insurance policy. Coverage begins on April 11. 5 The company paid $1,600 cash for two weeks' salaries earned by employees. 6 The company collected $10,500 cash on commissions from airlines on tickets obtained for customers. 7 The company paid $1,600 cash for two weeks' salaries earned by employees. 8 The company paid $400 cash for minor repairs to the company's computer. The company paid $1,450 cash for this month's telephone bill. 10 The company paid $2,200 cash in dividends. Problem 3-6A Part 4 4. Journalize the adjusting entries for the month and prepare the adjusted trial balance. (Do not round intermediate calculations.) View transaction list Journal entry worksheet 1 2 3 4 5 Two-thirds (or $167) of one month's insurance coverage has expired. Note: Enter debits before credits. Transaction General Journal Debit Credit a. Record entry Clear entry View general journal 1 Two-thirds (or $167) of one month's insurance coverage has expired. 2 At the end of the month, $500 of office supplies are still available. 3 This month's depreciation on the computer equipment is $400. 4 Employees earned $540 of unpaid and unrecorded salaries as of month-end. 5 The company earned $1,600 of commissions that are not yet billed at month-end. ADVENTURE TRAVEL Adjusted Trial Balance April 30, 2015 Account Title Debit Credit 101: Cash 106: Accounts receivable 124: Office supplies 128: Prepaid insurance 167: Computer equipment 168: Accumulated depreciationComputer 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 Problem 3-6A Part 5 5.1 Prepare the income statement for the month of April 30, 2015. ADVENTURE TRAVEL Income Statement For Month Ended April 30, 2015 Revenues: Expenses: Total expenses 5.2 Prepare the statement of owner's equity for the month of April 30, 2015. ADVENTURE TRAVEL Statement of Retained Earnings For Month Ended April 30, 2015 Retained earnings, April 1, 2015 Retained earnings, April 30, 2015 5.3 Prepare the balance sheet at April 30, 2015. ADVENTURE TRAVEL Balance Sheet April 30, 2015 Assets Total assets Liabilities Equity Total liabilities and equity Problem 3-6A Part 6 6.1 Prepare journal entries to close the temporary accounts and then post to section 6.2. View transaction list Journal entry worksheet 2 3 4 Record the entry to close revenue account(s). Note: Enter debits before credits. Date General Journal Debit Credit April 30 Record entry Clear entry View general journal 1 Record the entry to close revenue account(s). 2 Record the entry to close expense account(s). 3 Record the entry to close income summary account. 4 Record the entry to close the dividends account. 6.2 Post the journal entries to the ledger. General Ledger Accounts Cash Debit Credit Accounts Receivable Debit Credit Date Balance Date Balance Office Supplies Debit Credit Prepaid Insurance Debit Credit Date Balance Date Balance Computer Equipment Debit Credit Accumulated Depreciation-Computer Equipment Date Debit Credit Balance Date Balance Salaries Payable Debit Credit Common Stock Debit Credit Date Balance Date Balance Retained Earnings Debit Credit Dividends Debit Credit Date Balance Date Balance Commissions Earned Debit Credit Depreciation Expense-Computer Equipment Date Debit Credit Balance Date Balance Salaries Expense Debit Credit Insurance Expense Debit Credit Date Balance Date Balance Rent Expense Debit Credit Office Supplies Expense Debit Credit Date Balance Date Balance Repairs Expense Debit Credit Telephone Expense Debit Credit Date Balance Date Balance Income Summary Debit Credit Date Balance Problem 3-6A Part 7 7. Prepare a post-closing trial balance. (Please prepare your trial balance in chart of accounts order given in the question.) ADVENTURE TRAVEL Post-Closing Trial Balance April 30, 2015 Account Title Debit Credit Totals