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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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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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January 4 The company paid cash to Lyn Addie tor tive days work at the rate of \( \$ 195 \) per day, four of the five days relate to wages payable that were accrued in the prtor year, January 5 Santana Rey invested an additional \( \$ 23,400 \) cash in the company, 3anuary 7 The company purchased \( \$ 7,400 \) of merchandise from Kansas Corporation with terms of \( 1 / 10, \mathrm{n} / 30 \), fon shipping point, Involice dated January 7. January 9 The company recelved \( \$ 2,848 \) cash from Gomez Company as full payment on its account, January il The company completed a flve-day project for Alex's Engineering Company and billed it 85,410 , which is the total price of \( \$ 6,810 \) less the advance payment of \( \$ 1,400 \). The company debited Unearned Computer Services Revenue for \( \$ 1,400 \). January 13 the company sold merchandise with a retall value of 84,600 and a cost of 83,300 to Liu corporation, involce dated January 13. January is The company pald \( \$ 740 \) cash for frelght charges on the merchandise purchased on January 7 . January 16 The company recelved \( \$ 4,110 \) cash from Delta Company for computer services provided. January 17 The company paid Kansas Corporation for the Involce dated January 7, net of the discount. Yanuary 20 The company gave a price reduction (allowance) of \( \$ 700 \) to llu corporation and credited lifu's accounts recelvable for that amount. January 22 The company recelved the balance due from Liu Corporation, net of the discount and the allowance. January 24 The company returned defectlve merchandise to Kansas Corporation and accepted a credit against future purchases (debited accounts payable). The defective merchandise invoice cost, net of the discount, was 4486. January 26 The company purchased \( \$ 9,000 \) of merchandise from Kansas Corporation with terms of \( 1 / 10, n / 30 \), f00 destination, invoice dated January 26. January 26 The company sold merchandise with a \( \$ 4,590 \) cost for \( \$ 5,970 \) on credit to KC, Incorporated, involce dated January 26 . January 31 The company pald cash to Lyn Addle for 10 days' work at \( \$ 195 \) per day, February 1 The company pald \( \$ 2,565 \) cash to H1llside Mall for another three months' rent in advance. February 3 The company paid Kansas Corporation for the balance due, net of the cash discount, less the \( \$ 486 \) credlt from merchandlse returned on January 24, February 5 The company paid \( \$ 420 \) cash to Facebook for an advertisement to appear on February 5 only. February 11 The company recelved the balance due from Alex's Engineering Company for fees bllled on January 11. February 15 Santana Rey withdrew \( \$ 4,730 \) cash from the company for personal use.
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