Question

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.

Information:

On April 1, Renato Uhrig established Renato’s Travel Agency. The following transactions were completed during the month.

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

2. Paid $600 cash for April offi ce rent.

3. Purchased equipment for $3,000 cash.

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

5. Paid $800 cash for offi ce 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 $500 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 transaction (6).

Answer 1

(a)

	Cash	Accounts Receivable	Supplies	Equipment	Accounts Payable	Owner's Capital	Owner's Drawings	Revenues	Expenses
1	$     15,000					$       15,000
2	$         (600)								$             600
3	$      (3,000)			$          3,000
4					$             700				$             700
5	$         (800)		$             800
6	$       3,000	$            7,000						$       10,000
7	$         (500)						$             500
8	$         (500)				$           (500)
9	$      (2,500)								$          2,500
10	$       4,000	$          (4,000)
Total	$     14,100	$            3,000	$             800	$         3,000	$             200	$       15,000	$             500	$       10,000	$         3,800

Drawings and expenses are reduced from owner;s equity

(b)
Net Income = $10000 - 3800 = $6200