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Concept explainers
Concept Introduction:
General Ledger:
The accounts use to organize all the transactions of a business organization are termed as general ledger accounts.
Requirement 1:
Apply balance column format to prepare each ledger account.
![Check Mark](/static/check-mark.png)
Answer to Problem 1APSA
Format of balance column ledger account
Date | Description | Debit | Credit | Balance |
Explanation of Solution
The balance column format of ledger account keeps track of balancing amount remaining in the account on each transaction.
Concept Introduction:
Journal Entries:
Journal entries are medium of recording the financial transactions which occurred during an accounting year.
Requirement 2:
Journalizing the transaction which occurred during April and posting them to the ledger accounts.
![Check Mark](/static/check-mark.png)
Answer to Problem 1APSA
Accounts | Balance |
Cash | $27,000 |
$0 | |
Office Supplies | $1,000 |
Prepaid Insurance | $2,400 |
Computer Equipment | $20,000 |
$0 | |
Salaries Payable | $0 |
J. Nozomi, Capital | $50,000 |
J. Nozomi, Withdrawals | $1,500 |
Commission Earned | $8,000 |
Depreciation Expense − Computer Equipment | $0 |
Salaries Expense | $3,200 |
Insurance Expense | $0 |
Rent Expense | $1,800 |
Office Supplies Expense | $0 |
Repairs Expense | $350 |
Telephone Expense | $750 |
Explanation of Solution
Journal Entries
Date | Accounts | Debit | Credit |
April | |||
1 | Cash | $30,000 | |
Computer Equipment | 20,000 | ||
J. Nozomi, Capital | $50,000 | ||
2 | Rent Expense | 1,800 | |
Cash | 1,800 | ||
3 | Office Supplies | 1,000 | |
Cash | 1,000 | ||
10 | Prepaid Insurance | 2,400 | |
Cash | 2,400 | ||
14 | Salaries Expense | 1,600 | |
Cash | 1,600 | ||
24 | Cash | 8,000 | |
Commission Earned | 8,000 | ||
28 | Salaries Expense | 1,600 | |
Cash | 1,600 | ||
29 | Repair Expense | 350 | |
Cash | 350 | ||
30 | Telephone Expense | 750 | |
Cash | 750 | ||
30 | J. Nozomi, Withdrawals | 1,500 | |
Cash | 1,500 | ||
Ledger AccountsCash Account No. 101
Date | Description | Debit | Credit | Balance |
April 1 | J. Nozomi, Capital | $30,000 | $30,000 | |
2 | Rent Expense | $1,800 | 28,200 | |
3 | Office Supplies | 1,000 | 27,200 | |
10 | Prepaid Insurance | 2,400 | 24,800 | |
14 | Salaries Expense | 1,600 | 23,200 | |
24 | Storage Fees Earned | 8,000 | 31,200 | |
28 | Salaries Expense | 1,600 | 29,600 | |
29 | Repair Expense | 350 | 29,250 | |
30 | Telephone Expense | 750 | 28,500 | |
30 | J. Nozomi, Withdrawals | 1,500 | 27,000 | |
April 30 | Balance | 27,000 |
Accounts ReceivableAccount No. 106
Date | Description | Debit | Credit | Balance |
April 30 | Balance | 0 | ||
Office SuppliesAccount No. 124
Date | Description | Debit | Credit | Balance |
April 3 | Cash | $1,000 | $1,000 | |
April 30 | Balance | 1,000 |
Prepaid InsuranceAccount No. 128
Date | Description | Debit | Credit | Balance |
April 10 | Cash | $2,400 | $2,400 | |
April 30 | Balance | 2,400 |
Computer EquipmentAccount No. 167
Date | Description | Debit | Credit | Balance |
April 1 | J. Nozomi, Capital | $20,000 | $20,000 | |
April 30 | Balance | 20,000 |
Accumulated
Date | Description | Debit | Credit | Balance |
April 30 | Balance | 0 | ||
Salaries PayableAccount No. 209
Date | Description | Debit | Credit | Balance |
April 30 | Balance | 0 | ||
J. Nozomi, Capital Account No. 301
Date | Description | Debit | Credit | Balance |
April 1 | Cash | $30,000 | $30,000 | |
Computer Equipment | 20,000 | 50,000 | ||
April 30 | Balance | 50,000 |
J. Nozomi, WithdrawalsAccount No. 302
Date | Description | Debit | Credit | Balance |
April 30 | Cash | $1,500 | $1,500 | |
April 30 | Balance | 1,500 |
Commission Earned Account No. 405
Date | Description | Debit | Credit | Balance |
April 24 | Cash | $8,000 | $8,000 | |
April 30 | Balance | 8,000 |
Depreciation Expense - Computer EquipmentAccount No. 612
Date | Description | Debit | Credit | Balance |
April 30 | Balance | 0 | ||
Salaries ExpenseAccount No. 622
Date | Description | Debit | Credit | Balance |
April 14 | Cash | $1,600 | $1,600 | |
28 | Cash | 1,600 | 3,200 | |
April 30 | Balance | 3,200 |
Insurance Expense Account No. 637
Date | Description | Debit | Credit | Balance |
April 30 | Balance | 0 | ||
Rent Expense Account No. 640
Date | Description | Debit | Credit | Balance |
April 2 | Cash | $1,800 | $1,800 | |
April 30 | Balance | 1,800 |
Office Supplies Expense Account No. 650
Date | Description | Debit | Credit | Balance |
April 30 | Balance | 0 | ||
Repairs Expense Account No. 684
Date | Description | Debit | Credit | Balance |
April 29 | Cash | $350 | $350 | |
April 30 | Balance | 350 |
Telephone Expense Account No. 688
Date | Description | Debit | Credit | Balance |
April 30 | Cash | $750 | $750 | |
April 30 | Balance | 750 |
Income Summary Account No. 901
Date | Description | Debit | Credit | Balance |
April 30 | Balance | 0 | ||
Concept Introduction:
Unadjusted
An unadjusted trial balance shows the balances of all the accounts before considering the
Requirement 3:
To Prepare:
Prepare the unadjusted trial balance as April 30.
![Check Mark](/static/check-mark.png)
Answer to Problem 1APSA
The total balance of unadjusted trial balance is $58,000.
Explanation of Solution
ADENTURE TRAVEL.Unadjusted Trial Balance
April 30, 2018 | ||
Accounts | Debit | Credit |
Cash | $27,000 | |
Accounts Receivable | 0 | |
Office Supplies | 1,000 | |
Prepaid Insurance | 2,400 | |
Computer Equipment | 20,000 | |
Accumulated Depreciation − Computer Equipment | 0 | |
Salaries Payable | 0 | |
J. Nozomi, Capital | $50,000 | |
J. Nozomi, Withdrawals | 1,500 | |
Commission Earned | 8,000 | |
Depreciation Expense − Computer Equipment | 0 | |
Salaries Expense | 3,200 | |
Insurance Expense | 0 | |
Rent Expense | 1,800 | |
Office Supplies Expense | 0 | |
Repairs Expense | 350 | |
Telephone Expense | 750 | |
Totals | 58,000 | 58,000 |
Concept Introduction:
Adjusting Entries:
An adjusting entry is a
Requirement 4:
Journalizing and
![Check Mark](/static/check-mark.png)
Answer to Problem 1APSA
Accounts | Balance |
Accounts Receivable | $1,750 |
Office Supplies | $600 |
Prepaid Insurance | $2,267 |
Accumulated Depreciation − Computer Equipment | $500 |
Salaries Payable | $420 |
Commission Earned | $9,750 |
Depreciation Expense - Computer Equipment | $500 |
Salaries Expense | $3,620 |
Insurance Expense | $133 |
Office Supplies Expense | 400 |
Explanation of Solution
Date | Accounts | Debit | Credit |
April 30 | |||
a) | Insurance Expense | $133 | |
Prepaid Insurance | $133 | ||
b) | Office Supplies Expense | 400 | |
Office Supplies | 400 | ||
c) | Depreciation Expense − Computer Equipment | 500 | |
Accumulated Depreciation − Computer Equipment | 500 | ||
d) | Salaries Expense | 420 | |
Salaries Payable | 420 | ||
e) | Accounts Receivable | 1,750 | |
Commission Earned | 1,750 | ||
Accounts ReceivableAccount No. 106
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $0 | ||
4(e) | Commission Earned | $1,750 | 1,750 |
Office SuppliesAccount No. 124
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $1,000 | ||
4(b) | Office Supplies Expense | $400 | 600 |
Prepaid InsuranceAccount No. 128
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $2,400 | ||
4(a) | Insurance Expense | $133 | 2,267 |
Accumulated Depreciation − Computer EquipmentAccount No. 168
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $0 | ||
4(c) | Depreciation Expense − Computer Equipment | $500 | 500 |
Salaries PayableAccount No. 209
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $0 | ||
4(d) | Salaries Expense | $420 | 420 |
Commission Earned Account No. 405
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $8,000 | ||
4(e) | Accounts Receivable | $1,750 | 9,750 |
Depreciation Expense - Computer EquipmentAccount No. 612
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $0 | ||
4(c) | Accumulated Depreciation - Computer Equipment | $500 | 500 |
Salaries ExpenseAccount No. 622
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $3,200 | ||
4(d) | Salaries Payable | $420 | 3,620 |
Insurance Expense Account No. 637
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $0 | ||
4(a) | Prepaid Insurance | $133 | 133 |
Office Supplies Expense Account No. 650
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $0 | ||
4(b) | Office Supplies | $400 | 400 |
Concept Introduction:
Adjusted Trial Balance:
Considering all the expenses and revenue occurred irrespective of whether cash is outstanding or received in advance during an accounting period, the adjusted trial balance shows the accurate balances of all the accounts.
Requirement 5
To Prepare:
Prepare adjusted trial balance, income statement, statement of owner's equity and
![Check Mark](/static/check-mark.png)
Answer to Problem 1APSA
Particulars | Answers |
Total balance of adjusted trial balance | $60,670 |
Net income | 2,197 |
Owner's equity balance for the April month | 50,697 |
Total balance of assets and liabilities and owner's equity | 51,117 |
Explanation of Solution
ADENTURE TRAVEL. Adjusted Trial Balance
April 30, 2018 | ||
Accounts | Debit | Credit |
Cash | $27,000 | |
Accounts Receivable | 1,750 | |
Office Supplies | 600 | |
Prepaid Insurance | 2,267 | |
Computer Equipment | 20,000 | |
Accumulated Depreciation - Computer Equipment | $500 | |
Salaries Payable | 420 | |
J. Nozomi, Capital | 50,000 | |
J. Nozomi, Withdrawals | 1,500 | |
Commission Earned | 9,750 | |
Depreciation Expense - Computer Equipment | 500 | |
Salaries Expense | 3,620 | |
Insurance Expense | 133 | |
Rent Expense | 1,800 | |
Office Supplies Expense | 400 | |
Repairs Expense | 350 | |
Telephone Expense | 750 | |
Totals | 60,670 | 60,670 |
ADENTURE TRAVELIncome Statement
April 30, 2018 | ||
Revenue: | ||
Commission Earned | $9,750 | |
Expenses: | ||
Depreciation Expense - Computer Equipment | 500 | |
Salaries Expense | 3,620 | |
Insurance Expense | 133 | |
Rent Expense | 1,800 | |
Office Supplies Expense | 400 | |
Repairs Expense | 350 | |
Telephone Expense | 750 | |
Total Expense | 7,553 | |
Net Income | $2,197 |
ADENTURE TRAVELStatement of Owner's Equity
April 30, 2018 | ||
J. Nozomi, Capital; March 31, 2018 | $0 | |
Add: Owner Investment during the month | 50,000 | |
Net Income | 2,197 | |
Subtotal | 52,197 | |
Less: J. Nozomi, Withdrawals | 1,500 | |
J. Nozomi, Capital; April 30, 2018 | $50,697 |
ADENTURE TRAVELBalance Sheet
April 30, 2018 | ||
Assets | ||
Current Assets: | ||
Cash | $27,000 | |
Accounts Receivable | 1,750 | |
Office Supplies | 600 | |
Prepaid Insurance | 2,267 | |
Total Current Assets | $31,617 | |
Property, Plant and Equipment | ||
Computer Equipment | 20,000 | |
Less: Accumulated Depreciation | 500 | 19,500 |
Total Assets | $51,117 | |
Liabilities and Owner's Equity | ||
Liabilities | ||
Current Liabilities: | ||
Salaries Payable | 420 | |
Total Current Liabilities | 420 | |
Owner's Equity | ||
J. Nozomi, Capital; April 30, 2018 | $50,697 | |
Total Liabilities and Owner's Equity | $51,117 |
Concept Introduction:
Closing Entries:
Closing entries intends to close all the temporary accounts and transfer its balances to "income summary account" and then to the owner's capital account. The accounts which are closed at the end of every accounting period are called temporary accounts. Examples: revenue accounts and expenses accounts like salaries, rent, depreciation, insurance, commission expenses, etc.
Requirement 6
To Prepare:
Prepare closing entries to close all the temporary accounts and post them into their concern ledger.
![Check Mark](/static/check-mark.png)
Answer to Problem 1APSA
Accounts | Balance |
Cash | $27,000 |
Accounts Receivable | $1,750 |
Office Supplies | $600 |
Prepaid Insurance | $2,267 |
Buildings | $20,000 |
Accumulated Depreciation − Computer Equipment | $500 |
Salaries Payable | $420 |
J. Nozomi, Capital | $50,697 |
J. Nozomi, Withdrawals | $0 |
Commission Earned | $0 |
Depreciation Expense − Computer Equipment | $0 |
Salaries Expense | $0 |
Insurance Expense | $0 |
Rent Expense | $0 |
Office Supplies Expense | $0 |
Repairs Expense | $0 |
Telephone Expense | $0 |
Income Summary | $0 |
Explanation of Solution
Date | Accounts | Debit | Credit |
April 30 | |||
a) | Commission Earned | $9,750 | |
Income Summary | $9,750 | ||
b) | Income Summary | 7,553 | |
Depreciation Expense − Computer Equipment | 500 | ||
Salaries Expense | 3,620 | ||
Insurance Expense | 133 | ||
Rent Expense | 1,800 | ||
Office Supplies Expense | 400 | ||
Repairs Expense | 350 | ||
Telephone Expense | 750 | ||
c) | Income Summary | 2,197 | |
J. Nozomi, Capital | 2,197 | ||
d) | J. Nozomi, Capital | 1,500 | |
J. Nozomi, Withdrawals | 1,500 | ||
Commission EarnedAccount No. 405
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $9,750 | ||
6(a) | Income Summary | $9,750 | 0 |
Depreciation Expense − Computer Equipment Account No. 612
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $500 | ||
6(b) | Income Summary | $500 | 0 |
Salaries ExpenseAccount No. 622
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $3,620 | ||
6(b) | Income Summary | $3,620 | 0 | |
Insurance Expense Account No. 637
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $133 | ||
6(b) | Income Summary | $133 | 0 |
Rent Expense Account No. 640
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $1,800 | ||
6(b) | Income Summary | $1,800 | 0 |
Office Supplies Expense Account No. 650
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $400 | ||
6(b) | Income Summary | $400 | 0 |
Repairs Expense Account No. 684
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $350 | ||
6(b) | Income Summary | $350 | 0 |
Telephone Expense Account No. 688
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $750 | ||
6(b) | Income Summary | $750 | 0 |
Income Summary Account No. 901
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $0 | ||
6(a) | Commission Earned | $9,750 | 9,750 | |
6(b) | Depreciation Expense − Computer Equipment | $500 | 9,250 | |
Salaries Expense | 3,620 | 5,630 | ||
Insurance Expense | 133 | 5,497 | ||
Rent Expense | 1,800 | 3,697 | ||
Office Supplies Expense | 400 | 3,297 | ||
Repairs Expense | 350 | 2,947 | ||
Telephone Expense | 750 | 2,197 | ||
6(c) | J. Nozomi, Capital | 2,197 | 0 |
J. Nozomi, Capital Account No. 301
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $50,000 | ||
6(c) | Income Summary | $2,197 | 52,197 | |
6(d) | J. Nozomi, Withdrawals | $1,500 | 50,697 |
J. Nozomi, WithdrawalsAccount No. 302
Date | Description | Debit | Credit | Balance |
April 30 | Balance | $1,500 | ||
6(d) | J. Nozomi, Capital | $1,500 | 0 |
Concept Introduction:
The trial balance which is prepare after closing all the temporary accounts are termed as post-closing trial balance.
Requirement 7
To Prepare:
Prepare the post-closing trial balance?
![Check Mark](/static/check-mark.png)
Answer to Problem 1APSA
The total balance of post-closing trial balance is $51,617.
Explanation of Solution
ADENTURE TRAVELPost-Closing Trial Balance
April 30, 2018 | ||
Accounts | Debit | Credit |
Cash | $27,000 | |
Accounts Receivable | 1,750 | |
Office Supplies | 600 | |
Prepaid Insurance | 2,267 | |
Buildings | 20,000 | |
Accumulated Depreciation − Computer Equipment | $500 | |
Salaries Payable | 420 | |
J. Nozomi, Capital | 50,697 | |
J. Nozomi, Withdrawals | 0 | |
Commission Earned | 0 | |
Depreciation Expense − Computer Equipment | 0 | |
Salaries Expense | 0 | |
Insurance Expense | 0 | |
Rent Expense | 0 | |
Office Supplies Expense | 0 | |
Repairs Expense | 0 | |
Telephone Expense | 0 | |
Income Summary | 0 | |
Totals | 51,617 | 51,617 |
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Chapter 4 Solutions
Connect Access Card For Fundamental Accounting Principles
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