91Ó°ÊÓ

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 company. 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, \(1,400; office rent, \)1,000.

e. Earned service revenue on account, \(8,800.

f. Collected cash from customers on account, \)1,200.

Requirements

3. Prepare a trial balance at June 30, 2018

Step by step solution

01

Definition of Advertising Expense

Advertising expenses are defined as the cost incurred by the company on promoting and adverting the company or any product.

02

Opening of T-Accounts

Dean McChesney
Trial Balance
June 30, 2018
Accounts Title	Debit ($)	Credit ($)
Cash	$8,500
Accounts Receivables	$7,600
Office Supplies	$300
Accounts Payable		$700
Common Stock		$10,000
Service Revenue		$8,800
Salaries Expense	$1,400
Rent Expense	$1,000
Advertising Expense	$700
TOTAL	$19,500	$19,500

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