Answer:
A-Plus Travel Planners
Analysis of transactions:
A. Cash $10,000 (Increase Assets) Common Stock $10,000 (Increase Equity)
B. Office Supplies $300 (Decrease Profit) Cash $300 (Decrease Assets)
C. Advertising expense $700 (Decrease Profit) Cash $700 (Decrease Assets)
D. Salary expense $1,400 (Decrease Profit) Rent Expense $1,000 (Decrease Profit) Cash $2,400 (Decrease Assets)
E. Accounts Receivable $8,800 (Increase Assets) Service Revenue $8,800 (Increase Profit)
F. Cash $1,200 (Increase Assets) Accounts Receivable $1,200 (Decrease Assets)
Explanation:
a) Data and Calculations:
Expected net income = $6,000
Service Revenue $8,800
Expenses:
Office Supplies $300
Advertising 700
Admin. Salary 1,400
Rent 1,000 $3,400
Net income $5,400
Expected profit 6,000
Required improvement $600
b) To achieve profit target of $6,000 under the current revenue profile, A-Plus Travel Planners must decrease expenses by at least $600. Alternatively, it can increase its revenue by the same amount, while maintaining its costs at current level.
