Tyra Coy

April 21, 2021

Principles of Accounting 1
Homework for Chapter 4 – Problem 4-2A
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.

Required:
1. Use the balance column format to set up each ledger account listed in its chart of
accounts.

Balance Column Account Ledger

CASH ACCOUNT No. 101
Date Description PR Debit $ Credit $ Balance $
01-04-2011 Cash 101 20,000 20,000
02-04-2011 Rent expense 640 1,700 18,300
03-04-2011 Office supplies 124 1,100 17,200
10-04-2011 Prepaid insurance 128 3,600 13,600
14-04-2011 Salaries expense 622 1,800 11,800
24-04-2011 Commission earned 405 7,900 19,700
28-04-2011 Salaries expense 622 1,800 17,900
29-04-2011 Repairs expense 684 250 17,650
30-04-2011 Telephone expense 688 650 17,000
30-04-2011 Withdrawals 302 1,500 15,500

Accounts Receivable ACCOUNT No. 106

Date Description PR Debit $ Credit $ Balance $
30-04-2011 Commission earned 405 1,650 1,650

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.
General Journal
Date Description PR Debit Credit
April 1 Cash 101 20,000
Computer Equipment 167 40,000
J. Stafford, Capital 301 60,000
Owner invested in the business.
April 2 Rent Expense 640 1,700
Cash 101 1,700
Paid one month’s rent.
April 3 Office Supplies 124 1,100
Cash 101 1,100
Acquired office supplies.
April 10 Prepaid Insurance 128 3,600
Cash 101 3,600
Paid 12-months premium in advance.
April 14 Salaries Expense 622 1,800
Cash 101 1,800
Paid two weeks’ salaries
 April 24 Cash 101 7,900
Commissions Earned 405 7,900
Collected commissions from airlines.
April 28 Salaries Expense 622 1,800
Cash 101 1,800
Paid two weeks’ salaries.
April 29 Repairs Expense 684 250
Cash 101 250
Repaired the computer.
April 30 Telephone Expense 688 650
Cash 101 650
Paid the telephone bill.
April 30 J. Stafford, Withdrawals 302 1,500
Cash 101 1,500
Owner withdrew cash for personal use.

3. Prepare an unadjusted trial balance as of April 30.

SEE – IT – NOW TRAVEL
Unadjusted Trial Balance
April 30, 2011
No. Account Title Debit Credit
101 Cash $ 15,500
106 Accounts receivable 0
124 Office supplies 1,100
128 Prepaid insurance 3,600
167 Computer equipment 40,000
168 Accumulated depreciation – Computer equipment $ 0
209 Salaries payable 0
301 J. Stafford, Capital 60,000
302 J. Stafford, Withdrawals 1,500
405 Commissions earned 7,900
612 Depreciation expense – Computer equipment 0
622 Salaries expense 3,600
637 Insurance expense 0
640 Rent expense 1,700
650 Office supplies expense 0
684 Repairs expense 250
688 Telephone expense 650
Totals $ 67,900 $ 67,900

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.
Adjusting Entries
Letters Date Account Title PR Debit Credit
A April 30 Insurance Expense 637 200
Prepaid Insurance 128 200
To record expired insurance (2/3 x $300
per month)
B April 30 Office Supplies Expense 650 400
Office Supplies 124 400
To record cost of supplies used ($1,100 –
$700)
C April 30 Depreciation Expense – Computer Equipment 612 600
Accumulated Depreciation – Computer 168 600
Equipment
To record depreciation
D April 30 Salaries Expense 622 320
Salaries Payable 209 320
To record accrued salaries
E April 30 Accounts Receivable 106 1,650
Commissions Earned 405 1,650
To record accrued commissions

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.
SEE – IT – NOW TRAVEL
Income Statement
For Month Ended April 30, 2011
Debit Credit
Commissions earned $ 9,550
Expenses
Depreciation expense – Computer Equipment 600
Salaries expense 3,920
Insurance expense 200
Rent expense 1,700
Office supplies expense 400
Repairs expense 250
Telephone expense 650
Total Expenses 7,720
Net Income $ 1,830
 SEE – IT – NOW TRAVEL
Statement of Owner’s Equity
For Month Ended April 30, 2011
Debit Credit
J. Stafford, Capital , April 1, 2011 $0
Plus: Investment by owner 60,000
Net income 1,830
61,830
Less: Owner Withdrawals (1,500)
J. Stafford, Capital, April 30, 2011 $60,330

SEE – IT – NOW TRAVEL

Balance Sheet
April 30, 2011
Debit Credit
Assets
Cash $ 15,500
Accounts Receivable 1,650
Office Supplies 700
Prepaid Insurance 3,400
Computer Equipment $ 40,000
Less: Accumulated Depreciation- Computer Equipment (600) 39,400
Total Assets $60,650
Liabilities
Salaries Payable $ 320
Equity
J. Stafford, Capital 60,330
Total Liabilities and Equity $60,650

6. Prepare journal entries to close the temporary accounts and post these entries to the
ledger.
Closing Entries
Date Account Titles PR Debit Credit
April 30 Commission Earned 405 9,550
Income Summary 901 9,550
To close the revenue account.
April 30 Income Summary 901 7,720
Depreciation Expense – Computer Equipment 612 600
Salaries Expense 622 3,920
Insurance Expense 637 200
Rent Expense 640 1,700
Office Supplies Expense 650 400
Repairs Expense 684 250
 Telephone Expense 688 650
To close the expense accounts.
April 30 Income Summary 901 1,830
J. Stafford, Capital 301 1,830
To close the Income Summary account.
April 30 J. Stafford, Capital 301 1,500
J. Stafford, Withdrawals 302 1,500
To close the withdrawals account.

Ledger as of April 30
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
April 1 20,000 20,000
2 1,700 18,300
3 1,100 17,200
10 3,600 13,600
14 1,800 11,800
24 7,900 19,700
28 1,800 17,900
29 250 17,650
30 650 17,000
30 1,500 15,500
Accounts Receivable Acct. No. 106
Date Explanation PR Debit Credit Balance
April 30 Adjusting 1,650 1,650
Office Supplies Acct. No. 124
Date Explanation PR Debit Credit Balance
April 3 1,100 1,100
30 Adjusting 400 700
Prepaid Insurance Acct. No. 128
Date Explanation PR Debit Credit Balance
April 10 3,600 3,600
30 Adjusting 200 3,400
Computer Equipment Acct. No. 167
Date Explanation PR Debit Credit Balance
April 1 40,000 40,000
Accumulated Depreciation – Computer Equipment Acct. No. 168
Date Explanation PR Debit Credit Balance
April 30 Adjusting 600 600
Salaries Payable Acct. No. 209
Date Explanation PR Debit Credit Balance
April 30 Adjusting 320 320
J. Stafford, Capital Acct. No. 301
Date Explanation PR Debit Credit Balance
April 1 60,000 60,000
30 Closing 1,830 61,830
30 Closing 1,500 60,330
J. Stafford, Withdrawals Acct. No. 302
Date Explanation PR Debit Credit Balance
April 30 1,500 1,500
30 Closing 1,500 0
Commissions Earned Acct. No. 405
Date Explanation PR Debit Credit Balance
April 24 7,900 7,900
30 Adjusting 1,650 9,550
30 Closing 9,550 0
Depreciation Expense – Computer Equipment Acct. No. 612
Date Explanation PR Debit Credit Balance
April 30 Adjusting 600 600
30 Closing 600 0
Salaries Expense Acct. No. 622
Date Explanation PR Debit Credit Balance
April 14 1,800 1,800
28 1,800 3,600
30 Adjusting 320 3,920
30 Closing 3,920 0
Insurance Expense Acct. No. 637
Date Explanation PR Debit Credit Balance
April 30 Adjusting 200 200
30 Closing 200 0
Rent Expense Acct. No. 640
Date Explanation PR Debit Credit Balance
April 2 1,700 1,700
30 Closing 1,700 0
Office Supplies Acct. No. 650
Date Explanation PR Debit Credit Balance
April 30 Adjusting 400 400
30 Closing 400 0
Repairs Expense Acct. No. 684
Date Explanation PR Debit Credit Balance
April 29 250 250
30 Closing 250 0
Telephone Expense Acct. No. 688
Date Explanation PR Debit Credit Balance
April 30 650 650
30 Closing 650 0
Income Summary Acct. No. 901
Date Explanation PR Debit Credit Balance
April 30 Closing 9,550 9,550
 30 Closing 7,720 1,830
30 Closing 1,830 0
7. Prepare a post-closing trial balance.

SEE – IT – NOW TRAVEL

Post – Closing Trial Balance
April 30, 2011
Debit Credit
Cash $ 15,500
Accounts Receivable 1,650
Office Supplies 700
Prepaid Insurance 3,400
Computer Equipment 40,000
Accumulated Depreciation – Computer Equipment $ 600
Salaries Payable 320
J. Stafford , Capital 60,330
Totals $ 61,250 $ 61,250