On April 1, 2015, Jiro Nozomi created a new travel agency, Adventure Travel. The

ID: 2600895 • Letter: O

Question

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 $30,000 cash and computer equipment worth $20,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $1,800 cash for the first month's (April) rent. 3 The company purchased $1,000 of office supplies for cash. 10 The company paid $2,400 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 $8,000 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 $350 cash for minor repairs to the company's computer 30 The company paid $750 cash for this month's telephone bill 30 The company paid $1,500 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 $133) of one month's insurance coverage has expired b. At the end of the month, $600 of office supplies are still available. c. This month's depreciation on the computer equipment is $500. d. Employees earned $420 of unpaid and unrecorded salaries as of month-end e. The company earned $1,750 of commissions that are not yet billed at month-end

Explanation / Answer

Journal Entries

Ledger accounts

date

explanation

debit

credit

Explanation

Debit

Explanation

credit

1-Apr

computer equipment

20000

cash

30000

common stock

30000

rent expense

1800

common stock

50000

commissioned earned

8000

office supplies

1000

prepaid insurance

2400

2-Apr

rent expense

1800

salaries expense

1600

cash

1800

salaries expense

1600

repair expense

350

3-Apr

office supplies

1000

telephone expense

750

cash

1000

Dividend

1500

balance

27000

10-Apr

prepaid insurance

2400

total

38000

cash

2400

Explanation

Debit

Explanation

credit

prepaid insurance

16-Apr

salaries expense

1600

cash

2400

insurance expense

133

cash

1600

balance

Explanation

Debit

Explanation

credit

24-Apr

cash

8000

supplies

commissioned earned

8000

cash

1000

supplies expense

400

balance

600

18-Apr

salaries expense

1600

Adjusted trial balance

cash

1600

Explanation

debit

credit

cash

27000

29-Apr

repair expense

350

computer equipment

20000

cash

350

common stock

50000

rent expense

1800

30-Apr

telephone expense

750

office supplies

600

cash

750

prepaid insurance

2267

sarlaries expense

3620

30-Apr

Dividend

1500

commissioned earned

9750

cash

1500

repair expense

350

telephone expense

750

Adjustment entries

Dividend

1500

insurance expense

133

30-Apr

insurance expense

133

depreciation expense

500

prepaid insurance

133

accumulated depreciation-computer

500

salaries payable

420

30-Apr

supplies expense

400

comission receivables

1750

supplies

400

supplies expense

400

total

60670

30-Apr

depreciation expense

500

accumulated depreciation-computer

500

30-Apr

salaries expense

420

salaries payable

420

30-Apr

comission receivables

1750

commission earned

1750

income statement

explanation

debit

credit

commission earned

9750

less operating expense

7553

rent expense

1800

sarlaries expense

3620

repair expense

350

telephone expense

750

insurance expense

133

depreciation expense

500

supplies expense

400

net income

2197

statement of retained earning

opening balance in retained earning

net income

2197

less dividend paid

1500

retained earning

697

balance sheet

assets

current assets

cash

27000

prepaid insurance

2267

commission receivables

1750

office supplies

600

total of current assets

31617

computer equipment net off accumulated depreciation

19500

total of assets

51117

liabilities and shareholders equity

current liabilities

salaries payable

420

total of liabilities

420

shareholders equity

50697

common stock

50000

retained earnings

697

total of liabilities and shareholders equity

51117

Journal Entries

Ledger accounts

date

explanation

debit

credit

Explanation

Debit

Explanation

credit

1-Apr

computer equipment

20000

cash

30000

common stock

30000

rent expense

1800

common stock

50000

commissioned earned

8000

office supplies

1000

prepaid insurance

2400

2-Apr

rent expense

1800

salaries expense

1600

cash

1800

salaries expense

1600

repair expense

350

3-Apr

office supplies

1000

telephone expense

750

cash

1000

Dividend

1500

balance

27000

10-Apr

prepaid insurance

2400

total

38000

cash

2400

Explanation

Debit

Explanation

credit

prepaid insurance

16-Apr

salaries expense

1600

cash

2400

insurance expense

133

cash

1600

balance

Explanation

Debit

Explanation

credit

24-Apr

cash

8000

supplies

commissioned earned

8000

cash

1000

supplies expense

400

balance

600

18-Apr

salaries expense

1600

Adjusted trial balance

cash

1600

Explanation

debit

credit

cash

27000

29-Apr

repair expense

350

computer equipment

20000

cash

350

common stock

50000

rent expense

1800

30-Apr

telephone expense

750

office supplies

600

cash

750

prepaid insurance

2267

sarlaries expense

3620

30-Apr

Dividend

1500

commissioned earned

9750

cash

1500

repair expense

350

telephone expense

750

Adjustment entries

Dividend

1500

insurance expense

133

30-Apr

insurance expense

133

depreciation expense

500

prepaid insurance

133

accumulated depreciation-computer

500

salaries payable

420

30-Apr

supplies expense

400

comission receivables

1750

supplies

400

supplies expense

400

total

60670

30-Apr

depreciation expense

500

accumulated depreciation-computer

500

30-Apr

salaries expense

420

salaries payable

420

30-Apr

comission receivables

1750

commission earned

1750

income statement

explanation

debit

credit

commission earned

9750

less operating expense

7553

rent expense

1800

sarlaries expense

3620

repair expense

350

telephone expense

750

insurance expense

133

depreciation expense

500

supplies expense

400

net income

2197

statement of retained earning

opening balance in retained earning

net income

2197

less dividend paid

1500

retained earning

697

balance sheet

assets

current assets

cash

27000

prepaid insurance

2267

commission receivables

1750

office supplies

600

total of current assets

31617

computer equipment net off accumulated depreciation

19500

total of assets

51117

liabilities and shareholders equity

current liabilities

salaries payable

420

total of liabilities

420

shareholders equity

50697

common stock

50000

retained earnings

697

total of liabilities and shareholders equity

51117

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On April 1, 2015, Jiro Nozomi created a new travel agency, Adventure Travel. The

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