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PR CH 1

The document provides accounting transactions for American Travel Agency in April. It includes transactions for investing capital, paying rent and supplies, recognizing revenue, withdrawing cash, and paying expenses. The instructions are to prepare a tabular analysis of the transactions and compute the net income or loss for April from the owner's equity column.

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Mahmoud Ibrahim
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59 views2 pages

PR CH 1

The document provides accounting transactions for American Travel Agency in April. It includes transactions for investing capital, paying rent and supplies, recognizing revenue, withdrawing cash, and paying expenses. The instructions are to prepare a tabular analysis of the transactions and compute the net income or loss for April from the owner's equity column.

Uploaded by

Mahmoud Ibrahim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Accounting Principles MBA preparatory Course

Practice Chapter 1

On April 1, Barb Massoth established American Travel Agency. The following transactions were completed during the
month.

1. Invested $10,000 cash to start the agency.


2. Paid $400 cash for April office rent.
3. Purchased equipment for $2,500 cash.
4. Incurred $300 of advertising costs in the Chicago Tribune, on account.
5. Paid $600 cash for office supplies.
6. Recognized $9,500 for services rendered: $3,000 cash is received from customers, and the balance of $6,500 is
billed to customers on account.
7. Withdrew $200 cash for personal use.
8. Paid Chicago Tribune amount due in transaction (4).
9. Paid employees’ salaries $2,200.
10. Received $4,000 in cash from customers who have previously been billed in transaction (6).

Instructions

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

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

Cash A/R Supplies Office A/P Owner’s Drawing revenues Expenses


Equipment Capital

4
5

10

Sub-
Total
Total
Nancy Grimwood opened a law office, Nancy Grimwood, Attorney at Law, on July 1, 2017. On July 31, the balance sheet
showed Cash $4,000, Accounts Receivable $1,500, Supplies $500, Office Equipment $5,000, Accounts Payable $4,200, and
Owner’s Capital $6,800. During August the following transactions occurred.

1. Collected $1,400 of accounts receivable.


2. Paid $2,700 cash on accounts payable.
3. Recognized revenue of $9,000 of which $3,000 is collected in cash and the balance is due in September.
4. Purchased additional equipment for $1,000, paying $400 in cash and the balance on account.
5. Paid salaries $3,000, rent for August $900, and advertising expenses $350.
6. Withdrew $750 in cash for personal use.
7. Received $4,000 from Standard Federal Bank—money borrowed on a note payable.
8. Incurred utility expenses for month on account $550.

Instructions

(a) Prepare a tabular analysis of the August transactions beginning with July 31 balances. The column headings should be
as follows: Cash, Accounts Receivable, Supplies, Equipment , NotesPayable , AccountsPayable , Owner’sCapital , Owner’s
Drawings , Revenues , Expenses.

(b) Prepare an income statement for August, an owner’s equity statement for August, and a balance sheet at August 31.

Cash A/R Supplies Equipment N/P A/P Owner’s Drawing revenues Expenses
Capital

Sub-
Total
Total

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