Question

> Decision Case 2-1 Your friend, Dean McChesney, requested that you advise him on the effects that certain transactions will have on his business, A-Plus Travel Planners. Time is short, so you cannot journalize the transactions. Instead, you must analyze the transactions without a journal. McChesney will continue the business only if he can expect to earn a monthly net income of $6,000. The business completed the following transactions during June: a. McChesney deposited $10,000 cash in a business bank account to start the compan The company issued common stock to McChesney. b. Paid $300 cash for office supplies. c. Incurred advertising expense on account, $700. d. Paid the following cash expenses: administrative assistant's salary, $1,400: office tent, $1,000. e. Earned service revenue on account, $8,800. f. Collected cash from customers on account, $1,200.

Answer 1

Analysis of the transaction... w started the business with cinustment of $10,000 the capital (6) Expenses in the form incuired for $ 300 This means there is cash by $ 300. of office supplies for cash sediction in 6 Again there is increase in expense in the form of advertisement payable $700. There is increase in liability of acounts payable by $ 700_ d. Again there is increase in ex pense paid in cash for administrative assitants Salary$ 1400 f office gent $1000 → Increase decrease in in Expense by 2400 cash by 2400 4 (e). Earned cash service is not revenue $8800 but the yet received. So, Increase Increase in in Income & Asset in the of Accounts form Receivables

(6) Cash Teceived from costo mer $ 1200 - Cash increases by $1200 Accounts Beszivables decreases by 1200. Net Income - Revenue - Expenses 8800 – ( 300 + 700+ 1400 +1000) 8800 - 3400 $ 5400 manat The business had expected to & 6000 but has actually earned $ 5400. earn only Thus McChesney the business Showbl discontinue
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