Chapter 4, Problem 1APSA

To determine

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.

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.

To determine

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.

Answer to Problem 1APSA

Accounts	Balance
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

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 Depreciation − Computer EquipmentAccount No. 168

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

To determine

Concept Introduction:

Unadjusted Trial Balance:

An unadjusted trial balance shows the balances of all the accounts before considering the adjusting entries.

Requirement 3:

To Prepare:

Prepare the unadjusted trial balance as April 30.

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

To determine

Concept Introduction:

Adjusting Entries:

An adjusting entry is a journal entry which intends to record the expenses and revenue occurred during the accounting period.

Requirement 4:

Journalizing and posting of adjusting entries for the month.

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

To determine

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 balance sheet at April 30.

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

To determine

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.

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

To determine

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?

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