P11A On April 1 Julie Spengel established Spengels Travel Ag

P1-1A On April 1, Julie Spengel established Spengel\'s Travel Agency. The following tns actions were completed during the month 1. Invested $15,000 cash to start the agency. 2. Paid S600 cash for April office rent. 3. Purchased equipment for $3,000 cash. Incurred $700 ofadvertising 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 .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

Solution

a) Tabular analysis of the transactions : Sl. Transactions Cash Accounts Receivable Supplies Equipment Accounts Payable Capital Drawings Revenues Expenses No. Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit 1 Investment 15000 15000 2 Office Rent 600 600 3 Equipment purchased 3000 3000 4 Advertising costs 700 700 5 Office supplies 900 900 6 Performed Service 3000 7000 10000 7 Drawings 600 600 8 Accounts payable 500 500 9 Employees salaries 2500 2500 10 Accounts receivables 4000 4000 11 Profit transferred 6200 Balance c/d 13900 3000 900 3000 200 21200 600 22000 22000 7000 7000 900 900 3000 3000 700 700 21200 21200 600 600 0 10000 3800 0 b) Computation of Net Income / (Loss) for April i INCOME : Services Performed 10000 Other Income 0 Total 10000 ii EXPENSES : Employee Salaries 2500 Advertising costs 700 Office Rent 600 Total 3800 Net income (i - ii) 6200