In this case, you will complete the accounting cycle for one month for a new company. The following is the information concerning the company. Instructions are at the end of the case.
At the start of the new business the company set up the following chart of accounts:
101 Cash 405
106 Accounts Receivable 410
124 Office Supplies 612
128 Prepaid Insurance 622
167 Computer Equipment 637
168 Accumulated Depreciation—Computer Equip. 640
209 Salaries Payable 650
307 Common Stock 684
318 Retained Earnings 688
319 Dividends 901
Depreciation Expense—Computer Equip.
Office Supplies Expense
You may ADD additional accounts as necessary. Be sure to assign an account # based on the account classification:
Assets: 100– 199
Equity: 300- 399 Revenues: 400-499 Expenses: 600-699
April 1, 2019, John Adams created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month.
Adams invested $55,000 cash and computer equipment worth $24,000 in the company in April 1 exchange for common stock.
The company rented furnished office space by paying $5,400 cash for the first month’s (April)
The company purchased $4,200 of office supplies for cash and debited the entire amount to an expense account.
The company collected $12,000 for consulting services to be provided in the next four months rent.
The company paid $3,780 cash for the premium on a 12-month insurance policy. Coverage begins 10 on April 11.
14 The company paid $2,600 cash for two weeks’ salaries earned by employees.
Case 1 – 16th edition 19/SP
The company collected $19,400 cash on commissions from airlines on tickets obtained for 24 customers.
28 The company paid $2,600 cash for two weeks’ salaries earned by employees.
29 The company paid $450 cash for minor repairs to the company’s computer.
30 The company paid $1,800 cash for this month’s telephone bill.
30 The company paid $1,500 cash for dividends.
Use the following information for instructions 4 and 5:
Two-thirds of one month’s insurance coverage has expired.
At the end of the month, $2,700 of office supplies are still available.
Month’s depreciation on the computer equipment was recorded. The company uses straight-line method of depreciation, the computer is estimated to have 4 year useful life and no residual value.
Employees earned $780 of unpaid and unrecorded salaries as of month-end.
The company earned $2,200 of commissions that are not yet billed at month-end.
The company has provided consulting services for $2,800 for customers who have paid in advance (April 5th transaction)
1. Journalize April transactions in the provided General Journal;
2. Post April transactions to the provided ledger accounts (T-accounts), calculate and show the unadjusted balance of each account at the end of the month (unadjusted balances);
3. Prepare the trial balance in the worksheet;
4. Record the adjusting entries in the worksheet;
5. Journalize April adjusting entries in the General Journal;
6. Post the adjusting entries to the ledger accounts and determine the adjusted balances;
7. Prepare the adjusted trial balance in the worksheet;
8. Complete the income statements and the balance sheet columns of the worksheet;
9. Prepare in good form the income statement, statement of retained earnings and classified balance sheet for the month ending April 30;
10. Journalize the closing entries in the General Journal;
11. Post the closing entries in the ledger accounts.
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