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Problem 3-5A (Algo) Applying the accounting cycle LO P1, P3, P4, P5, P6 On April 1, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company's first month. April 2 Nozomi invested \( \$ 37,000 \) cash and computer equipment worth \( \$ 25,000 \) in the company in exchange for its common stock. April 3 The company rented furnished office space by paying \( \$ 2,500 \) cash for the first month's (April) rent. April 4 The company purchased \( \$ 1,400 \) of office supplies for cash. April 10 The company paid \( \$ 2,160 \) cash for a \( 12- \) month insurance policy. Coverage begins on April 11 . April 14 The company paid \( \$ 1,400 \) cash for two weeks' salaries earned by employees. April 24 The company collected \( \$ 10,000 \) cash for commissions revenue. April 28 The company paid \( \$ 1,400 \) cash for two weeks' salaries earned by employees. April 29 The company paid \( \$ 550 \) cash for minor repairs to computer equipment. April 30 The company paid \( \$ 1,000 \) cash for this month's telephone bill. April 30 The company paid \( \$ 1,600 \) cash in dividends.

Ask by Lambert Rose. in the United States
Mar 18,2025

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**Journal Entries for Adventure Travel for April** 1. **April 2** - **Debit:** Cash \( \$37,000 \) - **Debit:** Computer Equipment \( \$25,000 \) - **Credit:** Common Stock \( \$62,000 \) 2. **April 3** - **Debit:** Rent Expense \( \$2,500 \) - **Credit:** Cash \( \$2,500 \) 3. **April 4** - **Debit:** Office Supplies \( \$1,400 \) - **Credit:** Cash \( \$1,400 \) 4. **April 10** - **Debit:** Prepaid Insurance \( \$2,160 \) - **Credit:** Cash \( \$2,160 \) 5. **April 14** - **Debit:** Salaries Expense \( \$1,400 \) - **Credit:** Cash \( \$1,400 \) 6. **April 24** - **Debit:** Cash \( \$10,000 \) - **Credit:** Commissions Revenue \( \$10,000 \) 7. **April 28** - **Debit:** Salaries Expense \( \$1,400 \) - **Credit:** Cash \( \$1,400 \) 8. **April 29** - **Debit:** Repairs and Maintenance Expense \( \$550 \) - **Credit:** Cash \( \$550 \) 9. **April 30 (Telephone Bill)** - **Debit:** Telephone Expense \( \$1,000 \) - **Credit:** Cash \( \$1,000 \) 10. **April 30 (Dividends)** - **Debit:** Dividends \( \$1,600 \) - **Credit:** Cash \( \$1,600 \)

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Extra Insights

Creating a new travel agency is exciting, but it also comes with its share of fundamental accounting practices! Understanding how each transaction affects your accounting equation (Assets = Liabilities + Equity) is key. Each entry in the accounting journal not only keeps track of income and expenses but also lays the groundwork for your financial statements at month-end. Properly logging these transactions can help you stay on top of cash flow, spotting trends, and preparing for tax time like a pro! When working through the accounting cycle, one common mistake is failing to record transactions in the correct period. For instance, that cash paid for the 12-month insurance policy should be accounted as a prepaid expense. This helps in spreading the cost over time, ensuring your financial statements reflect accurate monthly expenses. Also, be careful with dividends; they reduce retained earnings and must be tracked distinctly. Remember, bookkeeping is both an art and a science—stay organized, and you’ll paint a beautiful picture of your business’s financial health!

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