Accounting Cycle Comprehensive Problem PDF

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Accounting Cycle Comprehensive Problem...

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Comprehensive Problem Chapters 1-3 On April 1, 2020, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month. April 1

Nozomi invested $32,000 cash and computer equipment worth $26,000 in the company in exchange for its common stock.

2

The Company rented furnished office space by paying $1,300 cash for the first month’s (April) rent.

3

The company purchased $2,500 of office supplies for cash.

10

The company paid $2,502 cash for the premium on a 12-month insurance policy. Coverage begins on April 11.

14

The company paid $2,300 cash for two weeks’ salaries earned by employees.

24

The company collected $16,000 cash on commissions from airlines on tickets obtained for customers.

28

The company paid $2,400 cash for two weeks’ salaries earned by employees.

29

The company paid $750 cash for minor repairs to the company’s computer.

30

The company paid $550 cash for this month’s telephone bill.

30

The company paid $1,200 cash for dividends.

The company’s chart of accounts follows: 101

Cash

612

Salaries Expense

106

Accounts Receivable

622

Depreciation Expense-Computer Equip

124

Office Supplies

637

Insurance Expense

128

Prepaid Insurance

640

Repairs Expense

167

Computer Equipment

650

Rent Expense

168

Accumulated Depreciation-Computer Equip.

684

Office Supplies Expense

209

Salaries Payable

688

Telephone Expense

307

Common Stock

318

Retained Earnings

319

Dividends

405

Commissions Earned 1

Requirements 1. Journalize April transactions. Leave a blank space between all journal entries (including adjusting and closing entries) and skip explanations. 2. Post the journal entries to the general ledger accounts. 3. Prepare a trial balance at April 30. 4. 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, $700 of office supplies are still available. c. This month’s depreciation on the computer equipment is $500. d. Employees earned $720 of unpaid and unrecorded salaries as of monthend. e. The company earned $3,050 of commissions that are not yet billed at month-end. 5. Prepare an adjusted trial balance. 6. Prepare an income statement and a retained earnings statement for April and a classified balance sheet at April 30. 7. Prepare journal entries to close the temporary accounts and post entries to the ledger. 8.

Prepare a post-closing trial balance.

2

Adventure Travel - Journal Journal Entries: Dat e 4/1

Accounts Cash Computer Equipment Common Stock

ACCT # (opt) 101 167 307

Debits

Credits

32,000 26,000 58,000

3

Journal Entries: Dat

Accounts

e

Adjusting Journal Entries: Dat Accounts e a.

ACCT # (opt)

Debits

Credits

ACCT # (opt)

Debits

Credits

b.

c.

d.

e.

4

Closing Journal Entries: Dat Accounts e 1.

ACCT # (opt)

Debits

Credits

2.

3.

Cash ──────────┬────────── │ │ │ │ │ │ │ │ │ │

Accounts Receivable ──────────┬────────── │ │ │ │ │

Office Supplies ──────────┬────────── │ │ │ │ │

Prepaid Insurance ──────────┬────────── │ │ │ │ │

Computer Equip ──────────┬────────── │ │ │ │ │

Accumulated Depreciation ──────────┬────────── │ │ │ │ │

Salaries Payable ──────────────────── │ │ │ │ │ 5

Common Stock ──────────┬────────── │ │ │ │ │

Retained Earnings ──────────┬────────── │ │ │ │ │

Dividends ──────────┬────────── │ │ │ │ │

Commissions Earned ──────────┬────────── │ │ │ │ │ │ │ │ │ │ │

Salaries Expense ──────────┬────────── │ │ │ │ │

Depreciation Expense ──────────┬────────── │ │ │ │ │

Insurance Expense ──────────┬────────── │ │ │ │ │

Repairs Expense ──────────┬────────── │ │ │ │ │

Rent Expense ──────────┬────────── │ │ │ │ │

Office Supplies Expense ──────────┬────────── │ │ │ │ │

Telephone Expense ──────────┬────────── │ │ │ │ │

Retained Earnings ──────────┬────────── │ │ │ │ │

Adventure Travel Trial Balances For The Month Ended April 30, 2020

Trial Balance Debits Credits

Adjusted Trial Balance Debits Credits

Post-Closing Trial Balance Debits Credits 6

Ca s h Ac c o u n t sr e c e i v a b l e Su p p l i e s Pr e p a i di n s u r a n c e Co mp u t e rEq u i p me n t Ac c u mu l a t e dd e p r e c i a t i o n Sa l a r i e sp a y a b l e Co mmo ns t o c k Re t a i n e de a r n i n g s Di v i d e n d s Co mmi s s i o n sEa r n e d Sa l a r i e se x p e n s e De p r e c i a t i o ne x p e n s e I n s u r a n c ee x p e n s e Re p a i r sEx p e n s e Re n t e x p e n s e Offic eSu p p l i e se x p e n s e T e l e p h o n eEx p e n s e T o t a l s

7

Adventure Travel Income Statement For the Month Ended April 30, 2020 Revenue: ________________________________________

$____________

Expenses: ________________________________________

$____________

________________________________________

____________

________________________________________

____________

________________________________________

____________

________________________________________

____________

________________________________________

____________

________________________________________

____________

Total Expenses

____________

Net Income

$____________

Adventure Travel Statement of Retained Earnings For the Month Ended April 30, 2020

_____________________________________________________________

$____________

_____________________________________________________________

____________

_____________________________________________________________

____________

_____________________________________________________________

$____________

8

Adventure Travel. Balance Sheet April 30, 2020 Assets _____________________________________________

$____________

_____________________________________________

____________

_____________________________________________

____________

_____________________________________________

____________

_____________________________________________

$____________

_____________________________________________

____________

Total Assets

____________ $____________

Liabilities _____________________________________________

$____________

_____________________________________________

____________

Total Liabilities

____________ Stockholders’ Equity

_____________________________________________

$____________

_____________________________________________

____________

Total Stockholders’ Equity Total Liabilities and Stockholders’ Equity

____________ $____________

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