Question

On April 1, 2017, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company’s first month.

Apr. 1 Nozomi invested \(30,000 cash and computer equipment worth \)20,000 in the company in exchange

for common stock.

2 The company rented furnished office space by paying \(1,800 cash for the first month’s

(April ) rent.

3 The company purchased \)1,000 of office supplies for cash.

10 The company paid \(2,400 cash for the premium on a 12-month insurance policy. Coverage begins

on April 11.

14 The company paid \)1,600 cash for two weeks’ salaries earned by employees.

24 The company collected \(8,000 cash on commissions from airlines on tickets obtained for customers.

28 The company paid \)1,600 cash for two weeks’ salaries earned by employees.

30 The company paid \(750 cash for this month’s telephone bill.

30 The company paid \)1,500 cash in dividends.

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

307 Common Stock 688 Telephone Expense

318 Retained Earnings 901 Income Summary

319 Dividends

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 (or \(133) of one month’s insurance coverage has expired.

b. At the end of the month, \)600 of office supplies are still available.

c. This month’s depreciation on the computer equipment is \(500.

d. Employees earned \)420 of unpaid and unrecorded salaries as of month-end.

e. The company earned $1,750 of commissions that are not yet billed at month-end.

5. Prepare the adjusted trial balance as of April 30. Prepare the income statement and the statement of

retained earnings for April and the balance sheet at April 30, 2017.

6. Prepare journal entries to close the temporary accounts and post these entries to the ledger.

7. Prepare a post-closing trial balance

Short answer

The total post-closing trial balance is $51,617.

Step-by-step solution

Definition of post-closing trial balance

The post-closing trial balance is the trial balance prepared after the closing entries.

Post-closing trial balance

Adventure Travel
Post-Closing Trial Balance
April 30, 2017
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		$50,697
Total	$51,617	$51,617