Question

P1-1A On April 1, Julie Spengel established Spengel’s Travel Agency. The following trans- actions were completed during the month.

1. Invested $15,000 cash to start the agency.

2. Paid $600 cash for April office rent.

3. Purchased equipment for $3,000 cash.

4. Incurred $700 of advertising costs in the Chicago Tribune, on account.

5. Paid $900 cash for office supplies.

6. Performed services worth $10,000: $3,000 cash is received from customers, and the balance of $7,000 is billed to customers on account.

7. Withdrew $600 cash for personal use.

8. Paid Chicago Tribune $500 of the amount due in transaction (4).

9. Paid employees’ salaries $2,500.

10. Received $4,000 in cash from customers who have previously been billed in transac- tion (6).

Instructions

(a) Prepare a tabular analysis of the transactions using the following column headings: Cash, Accounts Receivable, Supplies, Equipment, Accounts Payable, Owner’s Capital, Owner’s Drawings, Revenues, and Expenses.

(b) From an analysis of the owner’s equity columns, compute the net income or net loss for April.

Answer 1

Cash :
Investment / Capital	15,000
Rent Paid	(600)
equipment Purchase	(3,000)
Office supplies	(900)
Customer Receipts	3,000
Capital	(600)
Advertisment	(500)
Salaries Paid	(2,500)
Customer Receipts	4,000
Cash Balance	13,900

Revenue & Expense:
Service Rendered	10,000
Rent	(600)
Advertisment	(700)
office Supplies	(900)
Salaries	(2,500)
Equipment Purchased         3,000	5,300

Account Payable
Advertisement	700
Cash	500
Owner Capital Cash          15,000 With Draw             (600) Profit            5,300          19,700	200