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Problem 3-5A Applying the accounting cycle LO P1, P2, P3, P4, P5, P6, P7, P8 On April 1, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company's firs month. April 1 Nozomi invested $39,000 cash and computer equipment worth $35,000 in the company in exchange for common stock. 2 The company rented furnished office space by paying $2,300 cash for the first month's (April) rent. 3 The company purchased $1,100 of office supplies for cash. 10 The company paid $2,500 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. 14 The company paid $1,100 cash for two weeks' salaries earned by employees. 24 The company collected $17,000 cash for commissions earned. 28 The company paid $1,100 cash for two weeks' salaries earned by employees. 29 The company paid $550 cash for minor repairs to the company's computer. 30 The company paid $800 cash for this month's telephone bill. 30 The company paid $2,300 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. Prepaid insurance of $139 has expired this month. b. At the end of the month, $600 of office supplies are still available. c. This month's depreciation on the computer equipment is $400. d. Employees earned $550 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. 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 the adjusting entries for the month and prepare the adjusted trial balance. 5a. Prepare the income statement for the month of April 30. 5b. Prepare the statement of retained earnings for the month of April 30. 5c. Prepare the balance sheet at April 30. 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. ADVENTURE TRAVEL Unadjusted Trial Balance April 30 Journal entry worksheet 1 Prepaid insurance of $139 has expired this month. 2 At the end of the month, $600 of office supplies are still available. 3 This month's depreciation on the computer equipment is $400. 4 Employees earned $550 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 Debit Credit Adjusted Trial Balance April 30 Account Title 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 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. ADVENTURE TRAVEL Income Statement For Month Ended April Revenues: 1 1 Expenses: TTTT TT 1 1 1 TTTTTTTTTT 11 TL TTTTTTTT TTTTTT TTTTT TTTTTTT LITT TILL TTTT IT IT TTTTTTTT 1 3 TL on TTTTTOO Total expenses 1 1 - ADVENTURE TRAVEL Statement of Retained Earnings For Month Ended April 30 Retained earnings, April 1 $ 0 Retained earnings, April 30 $ 0 ULOT INT 1 TI ATT $ - AAA IN TTTTTT 1 T TT TTTTTTTTTT ADVENTURE TRAVEL Balance Sheet April 30 TTTTTTTTTTT TTTTTTTTTTTTTT TTTTTTT TTTTTTTT TTTTTTTTTTTTT 1 TL 1 Total liabilities and equity Total assets Total equity 1 Record the entry to close the revenue account(s). 2 Record the entry to close the expense account(s). 3 Record the entry to close the income summary. 4 Record the entry to close the dividends account. General Ledger accounts 101: Cash 106: Accounts Receivable Date Debit CreditBalance Date Debit CreditBalan 124: Office Supplies 128: Prepaid Insurance Date Debit CreditBalance Date Debit CreditBalan 168: Accumulated 167: Computer Equipment Depreciation- Computer equipment Date Debit CreditBalance Dato Debit CreditBalan 209: Salaries Payable 307: Common Stock Date Debit CreditBalance Date Debit CreditBalan 318: Retained Earnings 319: Dividends Date Debit CreditBalance Date Debit Credit Balan 405: Commissions 612: Depreciation Expense Computer Earned Equipment Date Debit CreditBalance Date Debit Credi Balan 622: Salaries Expense 637: Insurance Expense Date Debit CreditBalance Date Debit Cred Balan 640: Rent Expense 650: Office Supplies Expense ADVENTURE TRAVEL Post-Closing Trial Balance April 30 Account Title Debit Credit Totals $ 0 $ 0

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