Case Study
Case Accounting Cycle
JR World Expeditions is a travel agency that offers international and local travel packages. The company is owned and operated by James Robertson. The closing balances at the end of August 2023 and the chart of accounts are shown below.
JR World Expeditions James Robertson August 01, 2023 September 01, 2023
JR World Expeditions
Balance Sheet
As at August 31, 2023
Assets Liabilities
Cash $31,250 Accounts Payable $14,500
Accounts Receivable $10,800 Unearned Revenue $11,000
Prepaid Insurance $0 Bank Loan $32,400
Equipment $35,000 Note Payable
Accumulated Depreciation -$9,000 Total Liabilities $57,900
Robertson, Capital $10,150
Total Assets $68,050 Total Liabilities & Owners' Equity $68,050
Account Description Account # Account Description Account #
ASSETS REVENUE
Cash 101 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 Salaries Expense 545
Interest Payable 205 Telephone Expense 550
Salary Payable 210 Travel Expense 555
Unearned Revenue 215 Rent Expense 560
Bank Loan 220
Note Payable 225
OWNER'S EQUITY
Robertson, Capital 300
Robertson, Withdrawals 310
Income Summary 315
For the month of September 2023, JR World Expeditions had the following transactions:
Sep 1 James invested $12,600 cash and equipment valued at $9,900 into the business. $12,600 9900
Sep 1 Prepaid $11,184 for insurance for one year. $11,184
Sep 1 Paid $3,250 cash for September's rent. $3,250
Sep 2 Provided travel services to group of travellers; they paid $46,400 now and will pay $9,280 later. $46,400 9280
Sep 2 Purchase equipment by signing a Note Payable for $15,000, due in 3 years plus accrued interest at 10%. $15,000 3
0.10
Sep 5 Recorded travel expenses for $16,820 to be paid next month. $16,820
Sep 15 Paid $11,600 cash to reduce the balance of accounts payable. $11,600
Sep 18 Received $5,400 cash from customers for the travel services provided last month. $5,400
Sep 20 Received a telephone bill for $720 which will be paid next month. $720
Sep 23 Paid $8,460 cash for employee's salaries. $8,460
Sep 26 Received $26,840 cash in advance from travellers for travel services to be provided next month. $26,840
Sep 28 Paid $4,650 advertising expense for the promotion of the travel and tours in the month of September. $4,650
Sep 29 The owner withdrew $5,710 cash for personal use. $5,710
Sep 30 Paid $891 cash for the bank loan which included $675 principle and $216 interest. The loan is due in 4 years with monthly repayments of $675 principle plus interest at 8% on outstanding balance. $675 $216
4.00
$8,100 0.08
At the end of September, the following adjustment had to be journalized to properly report the balances of the company’s accounts:
Sep 30 $30,140 of the balance of unearned revenue, still remains unearned. $3,300
Sep 30 One month of prepaid insurance worth $932 has been used. $932
Sep 30 Monthly depreciation on the equipment was $1,320. $1,320
Sep 30 Accrued salary expense of $4,230 for an employee. $4,230
Sep 30 Accrued interest on the Note Payable amounts to $125. 125
Required:
a) Enter the opening balances from the August 2023 balance sheet into the general ledger accounts.
b) Prepare the journal entries for the month of September 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 September 2023 (use the income summary account), and post the journal entries to the appropriate general ledger accounts.
g) Create the post-closing trial balance.
Journal
Journal Page 1
Date Account Title and Explanation PR DR CR
Journal Page 2
Date Account Title and Explanation PR DR CR
Ledge
Account: Cash GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Accounts Receivable GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Prepaid Insurance GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Equipment GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Accumulated Depreciation GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Accounts Payable GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Interest Payable GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Salary Payable GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Unearned Revenue GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Bank Loan GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Note Payable GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Robertson, Capital GL No:
Date Description PR DR CR Balance (DR or CR)
Opening Balance
Account: Robertson, Withdrawals GL No:
Date Description PR DR CR Balance (DR or CR)
Account: Income Summary GL No:
Date Description PR DR CR Balance (DR or CR)
Account: Service Revenue GL No:
Date Description PR DR CR Balance (DR or CR)
Account: Advertising Expense GL No:
Date Description PR DR CR Balance (DR or CR)
Account: Depreciation Expense GL No:
Date Description PR DR CR Balance (DR or CR)
Account: Insurance Expense GL No:
Date Description PR DR CR Balance (DR or CR)
Account: Interest Expense GL No:
Date Description PR DR CR Balance (DR or CR)
Account: Salaries Expense GL No:
Date Description PR DR CR Balance (DR or CR)
Account: Telephone Expense GL No:
Date Description PR DR CR Balance (DR or CR)
Account: Travel Expense GL No:
Date Description PR DR CR Balance (DR or CR)
Account: Rent Expense GL No:
Date Description PR DR CR Balance (DR or CR)
Worksheet
JR World Expeditions
Worksheet
September 30, 2023
Unadjusted Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet
Account Titles DR CR DR CR DR CR DR CR DR CR
Adjustments
Journal Page 3
Date Account Title and Explanation PR DR CR
Statements
JR World Expeditions
Income Statement
For the Month Ended September 30, 2023
JR World Expeditions
Statement of Owner's Equity
For the Month Ended September 30, 2023
JR World Expeditions
Balance Sheet
As at September 30, 2023
Closing Entries
Journal Page 4
Date Account Title and Explanation PR DR CR
Post-Closing Trial Balance
JR World Expeditions
Post-Closing Trial Balance
September 30, 2023
Account Titles DR CR