On
April 1, 2011, Jennifer Stafford created a new travel agency, See-It-Now
Travel. The following transactions occurred during the company’s first month.
P4-2A
Applying the accounting cycle - On April 1,
2011, Jennifer Stafford created a new travel agency, See-It-Now Travel.
P4-2A
On April 1, 2011, Jennifer Stafford created a new travel agency, See-It-Now
Travel. The following transactions occurred during the company’s first month.
April
1 Stafford invested $20,000 cash and computer equipment worth $40,000 in the
company.
2
The company rented furnished office space by paying $1,700 cash for the first
month’s (April) rent.
3
The company purchased $1,100 of office supplies for cash.
10
The company paid $3,600 cash for the premium on a 12-month insurance policy.
Coverage begins on April 11.
14
The company paid $1,800 cash for two weeks’ salaries earned by employees.
24
The company collected $7,900 cash on commissions from airlines on tickets
obtained for customers.
28
The company paid $1,800 cash for two weeks’ salaries earned by employees.
29
The company paid $250 cash for minor repairs to the company’s computer.
30
The company paid $650 cash for this month’s telephone bill.
30
Stafford withdrew $1,500 cash from the company for personal use.
The
company’s chart of accounts follows:
101
Cash 405
Commissions Earned
106
Accounts Receivable 612
Depreciation Expense — Computer Equip.
124
Office Supplies 622
Salaries Expense
128
Prepaid Insurance 637
Insurance Expense
167
Computer Equipment 640
Rent Expense
168
Accumulated Depreciation — Computer Equip. 650
Office Supplies Expense
209
Salaries Payable 684
Repairs Expense
301
J. Stafford, Capital 688
Telephone Expense
302
J. Stafford, Withdrawals 901
Income Summary
Required
1.
Use the balance column format to set up each ledger account listed in its chart
of accounts.
2.
Prepare journal entries to record the transactions for April and post them to
the ledger accounts. The company records prepaid and unearned items in balance
sheet accounts.
3.
Prepare an unadjusted trial balance as of 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 $600.
d.
Employees earned $320 of unpaid and unrecorded salaries as of month-end.
e.
The company earned $1,650 of commissions that are not yet billed at month-end.
5.
Prepare the income statement and the statement of owner’s equity for the month
of April and the balance sheet at April 30, 2011.
6.
Prepare journal entries to close the temporary accounts and post these entries
to the ledger.
7.
Prepare a post-closing trial balance.
Check
(3) Unadj. trial balance totals, $67,900
(4a)
Dr. Insurance Expense, $200
(5)
Net income, $1,830; J. Stafford, Capital (4/30/2011), $60,330; Total assets,
$60,650
(7)
P-C trial balance totals, $61,250
SOLUTION
PREVIEW
SEE-IT-NOW
TRAVEL
General
Journal
|
Date
|
Accounting
Titles
|
Acct
No.
|
Debit
|
Credit
|
|
|
Transactions for
April (Part 2):
|
|
|
|
|
|
|
Apr 1
|
Cash
|
101
|
20,000
|
|
|
|
|
Computer Equipment
|
167
|
40,000
|
|
|
|
|
Stafford,
Capital
|
301
|
|
60,000
|
<-Correct
|
|
|
Owner invested in the business
|
|
|
|
|
File
name: P4-2A-On-April-1-2011.xls
File type: XLS Price: $15
