Tee's Golf School completed the following transactions during January:

Requirements 

1. Show how each transaction would be handled using the accrual basis of accounting. Give the amount of revenue or expense for January. Journal entries are not required. Use the following format for your answer, and show your computations:

2. Compute January net income or net loss under the accrual basis of accounting.

3. State why the accrual basis of accounting is preferable to the cash basis.

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Jan. 1 Prepaid insurance for January through March, $300. 4 Performed service (gave golf lessons) on account, $2,200. 5 Purchased equipment on account, $1,900. 8 Paid property tax expense, $450. 11 Purchased office equipment for cash, $800. 19 Performed service and received cash, $700. 24 Collected $400 on account. 26 Paid account payable from January 5. 29 Paid salary expense, $900. 31 Recorded adjusting entry for January insurance expense (see Jan. 1). 31 Debited unearned revenue and credited revenue to adjust the accounts, $600.