Reference no: EM13555700

On April 1, 2008, Salem Saleh created a new travel agency, Salem Travel. The following transactions occurred during the company's first month. April 1 Mr. Saleh invested $30,000 cash and computer equipment worth $20,000 in the business. 2 Rented furnished office space by paying $1,800 cash for the first month's (April) rent. 3 Purchased $1,000 of office supplies for cash. 10 Paid $2,400 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. 14 Paid $1,600 cash for two weeks' salaries earned by employees. 24 Collected $8,000 cash on commissions from airlines on tickets obtained for customers. 28 Paid another $1,600 cash for two weeks' salaries earned by employees. 29 Paid $350 cash for minor repairs to the company's computer. 30 Paid $750 cash for this month's telephone bill. 30 Mr. Saleh withdrew $1,500 cash for personal use. The company's chart of accounts follows: Account No. Account Name Account No. Account Name 101 Cash 405 Commission 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 301 S. Saleh, Capital 688 Telephone Expense 302 S. Saleh, Withdrawals 901 Income Summary

Required 1. Prepare journal entries to record the transactions for April and post them to the ledger accounts (T - accounts). The company records prepaid and unearned items in balance sheet accounts.

2. Prepare a work sheet for April, 2008, starting with the unadjusted trial balance and including adjustments based on these additional facts:

a. Two-thirds 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.

3. Use the work sheet to prepare journal entries to record the adjusting entries and post these entries to the ledger.

4. Use the work sheet to prepare the income statement and the statement of owner's equity for the month of April and the balance sheet at April 30, 2008.

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

6. Prepare a post-closing trial balance.