Question

On April 1, Vaughn Travel Agency began operations. The following transactions were completed during the month.

1.		Owner invested $22,000 in the business.
2.		Obtained a bank loan for $8,600 by issuing a note payable.
3.		Paid $13,000 cash to buy equipment.
4.		Paid $1,100 cash for April office rent.
5.		Paid $1,500 for supplies.
6.		Purchased $600 of advertising in the Daily Herald, on account.
7.		Performed services for $18,000: cash of $3,000 was received from customers, and the balance of $15,000 was billed to customers on account.
8.		Cash withdrawal of $400 by owner for personal use.
9.		Paid the utility bill for the month, $2,800.
10.		Paid Daily Herald the amount due in transaction (6).
11.		Paid $60 of interest on the bank loan obtained in transaction (2).
12.		Paid employees’ salaries and wages, $6,300.
13.		Received $12,000 cash from customers billed in transaction (7).

Answer 1

Solution

No.	Accounts Titles and Explanation	Debit	Credit
1	Cash	$22,000
	Common stock		$22,000
2	Cash	$8,600
	Notes payable		$8,600
3	Equipment	$13,000
	Cash		$13,000
4	Rent expense	$1,100
	Cash		$1,100
5	Supplies	$1,500
	Cash		$1,500
6	Advertisement expense	$600
			$600
7	Cash	$3,000
	Accounts receivable	$15,000
	Service revenue		$18,000
8	Drawings	$400
	Cash		$400
9	Utility expense	$2,800
	Cash		$2,800
10	Accounts payable	$600
	Cash		$600
11	Interest expense	$60
	Cash		$60
12	Salaries and wages expense	$6,300
	Cash		$6,300
13	Cash	$12,000
	Accounts receivable		$12,000

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