Answer To: a) Enter the opening balances from the March 31, 2020 balance sheet into the general ledger accounts...
Yash answered on Feb 25 2021
Case Study
Part XXX Accounting Cycle
JM Travel and Tours is a travel agency that offers international and local travel services. The company is owned and operated by Justine Mendoza. The closing balances at the end of March 2020 and the chart of accounts are shown below.
JM Travel and Tours Justine Mendoza 2020
JM Travel and Tours
Balance Sheet
As at March 31, 2020
Assets Liabilities
Current Assets Current Liabilities
Cash $ 12,450 Accounts Payable $ 16,400
Accounts Receivable 6,420 Unearned Revenue 8,800
Prepaid Insurance _______ Bank loan- current portion due 6,000
Totals Current Assets $ 18,870 Total Current Liabilities 31,200
Property, Plant & Equipment
Equipment $ 61,000 Bank Loan - Non-current portion 24,000
Accumulated Depreciation (7,700) Total Liabilities 55,200
Total Property, Plant & Equipment 53,300 Owner's Equity
Mendoza Capital 16,970
Total Assets $ 72,170 Total Liabilities & Owners' Equity 72,170
Account Description Account # Account Description Account #
ASSETS REVENUE
Cash 101 Travel Service Revenue 400
Accounts Receivable 105 EXPENSES
Prepaid Insurance 110 Advertising Expense 500
Equipment 120 Depreciation Expense 510
Accumulated Depreciation 125 Insurance Expense 515
LIABILITIES Interest Expense 520
Accounts Payable 200 Rent Expense 540
Bank Loan Interest Payable 205 Salaries Expense 545
Salary Payable 210 Telephone Expense 550
Unearned Revenue 215 Travel Expense 555
Bank Loan-Current Portion 217
Bank Loan-Non-Current Portion 220
OWNER'S EQUITY
Mendoza Capital 300
Mendoza Withdrawals 310
Income Summary 315
For the month of April 2020, JM Travel and Tours had the following transactions:
Apr 1 Prepaid $7,200 for insurance for one year $9,000 7200
*'Apr 1 Received $12,000 from Bank Loan to be repaid in 6 months plus accrued interest at 5%. $12,000 5%
Apr 5 Paid $2,100 cash for April's rent
Apr 6 Provided $15,000 of travel services for clients on account.
Apr 7 Incurred $9,200 in travel expenses to be paid next month. $12,000
Apr 11 Purchased equipment with $8,800 cash $8,800
Apr 15 Paid $8,200 cash to reduce the balance of accounts payable $7,600
Apr 16 Justine invested $9,000 cash and equipment valued at $7,200 into the business $7,200
Apr 18 Received $3,210 from customers as payments on account for traveller services provided last month.
Apr 20 Received a telephone bill for $1,710 which was paid same day $1,710
Apr 23 Paid $3,200 cash for employee's salaries $3,200
Apr 25 Received $15,000 cash in advance from clients who will receive travel services next month. $15,000
**'Apr 26 Paid the monthly payment of the bank loan, $500 plus interest of $75.
Apr 27 Provided travel services for clients for $30,000 cash $2,100
Apr 28 Paid $3,000 advertising expense for the promotion of the travel and tours in the month of April $3,000
Apr 29 The owner withdrew $2,500 cash for personal use $2,500
* Since the loan is to be repaid in less than one year, use the Bank Loan-Current Portion for the credit entry
** Use the Bank Loan-Non-Current Portion for the credit entry since the same amount is still due over the next 12 months; therefore amount of current portion has not changed.
At the end of April, the following adjustment had to be journalized to properly report the balances of the company’s accounts:
Apr 30 Recognized $3,500 of Unearned Revenue as being earned during the month of April. $2,640
Apr 30 Interest of $50 has accrued on the bank loan. $50
Apr 30 One month of prepaid insurance worth $600 has expired.
Apr 30 One month of depreciation for $500 needs to be recorded.
Apr 30 Accrued salary expense of $720 needs to be recorded
Note: The bank loan is repayable in monthly payments of $500 plus interest. Current portion is $6,000 ($500x12) and long-term is $24,000. When recording monthly payment, please be sure to debit the non-current portion and not the current portion as the latter will not change until the last year of the loan.
Required:
a) Enter the opening balances from the March 2020 balance sheet into the general ledger accounts.
b) Prepare the journal entries for the month of April and post them to the appropriate general ledger accounts.
c) Create the trial balance in the worksheet, and then complete the remaining section of the worksheet.
d) Create the income statement, statement of owner’s equity and the classified balance sheet.
e) Prepare the journal entries for the adjustments and post them to the appropriate general ledger accounts.
f) Prepare the journal entries to close the books for the month of April 2020(use the income summary account), and post the journal entries to the appropriate general ledger accounts.
g) Create the post-closing trial balance.
Note: Please read the instructions carefully and follow required steps in the order provided above. Refer to your textbook if needed (Chapter 6) for format of financial statements. Templates have been set up using formats shown in textbook.
Journal
Note: Please include explanation and leave one line between each...