During the month of June, Bon Voyage Travel recorded the following transactions:
1. Owners invested $25,000 in cash to start the business. They received common stock.
2. The month's rent of $500 was prepaid in cash.
3. Equipment costing $8,000 was bought on credit.
4. $500 was paid for office supplies.
5. Advertising costing $750 was paid for with cash.
6. Paid $3,000 employee salaries in cash.
7. Earned travel commissions of $ 10,000 of which $2,000 was received in cash.
8. Paid $5,000 of the $8,000 owed to the equipment supplier.
9. Used $100 of the office supplies.
10. Charged $1,000 of miscellaneous expenses on the corporate credit card.
Required:
a. Prepare an analysis of the month's transactions using the same tabular format as shown in Problem 1-4 (ignore taxes).
b. Explain how the transactions during the month changed the basic accounting equation (Assets = Liabilities + Owners' equity) for the company.
c. Prepare an income statement for the month.
d. Explain the changes in the Cash account.
e. Explain why the change in the Cash account and the month's income are not the same.