(a)		Balance Sheet						Income Statement
		Assets	=	Liabilities	+	Stockholders'Equity		Revenues		Expenses		Net Income
1-Apr		$-		$-		$-		$-		$-
1		(400)				(400)				400		(400)
2		8,000				8,000
3		2,500				2,500
3		(2,500)				(2,500)

P1-1B Analyze transactions and compute net income

On April 1, Bill Taylor established Taylor Made Travel Agency. The following transactions were

completed during the month.

1

Paid $400 cash for April office rent.

2

Stockholders invested $8,000 cash in the business in exchange for common stock.

3

Purchased equipment for $2,500 cash.

4

Incurred $300 of advertising costs in the Chicago Tribune, on account.

5

Paid $500 cash for office supplies.

6

Performed services worth $8,500: $2,000 cash is received from customers, and the

balance of $6,500 is billed to customers on account.

7

Declared and paid a $200 cash dividend.

Hint: Dividends is a return of capital, what account does paying dividends reduce? Think about the Retained earnings equation.

8

Paid Chicago Tribune amount due in transaction (4).

9

Paid employees' salaries $2,000.

10

Received $5,700 in cash from customers billed previously in transaction (6).

Instructions

(a)

Prepare a tabular (transaction) analysis of the April transactions. The first three been provided as examples.

Make sure your Balance Sheet stays in balance. Assets = Liabilites + Equity.

Make sure to total your columns.

(b)

Use the transaction analysis totals for Revenues and Expenses to calculate Net income at the end.