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Chapter 1

The document outlines financial transactions for three different businesses: Spengel’s Travel Agency, Matrix Consulting, and a law office opened by Judi Salem. Each section details specific transactions, including investments, expenses, revenues, and withdrawals, along with instructions for preparing financial statements such as income statements and balance sheets. The document serves as a guide for analyzing and recording these transactions to assess the financial position of each business.

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30 views2 pages

Chapter 1

The document outlines financial transactions for three different businesses: Spengel’s Travel Agency, Matrix Consulting, and a law office opened by Judi Salem. Each section details specific transactions, including investments, expenses, revenues, and withdrawals, along with instructions for preparing financial statements such as income statements and balance sheets. The document serves as a guide for analyzing and recording these transactions to assess the financial position of each business.

Uploaded by

shariful.ju.19
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Chapter-1

1.On April 1, Julie Spengel established Spengel’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 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 transaction (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

2. Trixie Maye started her own consulting fi rm, Matrix Consulting, on May 1, 2017. The following
transactions occurred during the month of May.
May 1 Trixie invested $7,000 cash in the business.
2 Paid $900 for office rent for the month.
3 Purchased $600 of supplies on account.
5 Paid $125 to advertise in the County News.
9 Received $4,000 cash for services performed.
12 Withdrew $1,000 cash for personal use.
15 Performed $5,400 of services on account.
17 Paid $2,500 for employee salaries.
20 Paid for the supplies purchased on account on May 3.
23 Received a cash payment of $4,000 for services performed on account on May 15.
26 Borrowed $5,000 from the bank on a note payable.
29 Purchased equipment for $4,200 on account.
30 Paid $275 for utilities.
Instructions:
(a) Prepare an income statement for the month of May.
(b) Prepare a balance sheet at May 31, 2017

3. Judi Salem opened a law office on July 1, 2017. On July 31, the balance sheet
showed Cash $5,000, Accounts Receivable $1,500, Supplies $500, Equipment $6,000,
Accounts Payable $4,200, and Owner’s Capital $8,800. During August, the following trans
actions occurred.
1. Collected $1,200 of accounts receivable.
2. Paid $2,800 cash on accounts payable.
3. Recognized revenue of $7,500 of which $3,000 is collected in cash and the balance is
due in September.
4. Purchased additional equipment for $2,000, paying $400 in cash and the balance on
account.
5. Paid salaries $2,500, rent for August $900, and advertising expenses $400
6.Withdrew $700 in cash for personal use.
7. Received $2,000 from Standard Federal Bank—money borrowed on a note payable.
8. Incurred utility expenses for month on account $270.

Instructions
(a) Prepare a tabular analysis of the August transactions beginning with July 31 balances
(b) Prepare an income statement for August, an owner’s equity statement for August, and a balance sheet
at August 31.

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