Kandi's Office Design had the following transactions during January:

Jan. 1 Paid for insurance for January through March, $2,400. It is company policy to record this sort of transaction in an asset account.

4 Performed design service on account, $7,000.

5 Purchased office furniture on account, $2,100.

8 Paid advertising expense, $2,000 cash.

15 Purchased office equipment for cash, $4,500.

19 Performed design services and received cash, $9,000.

24 Collected $3,500 on account for the January 4 service.

26 Paid account payable from January 5.

29 Paid salaries expense, $7,500 cash.

31 Recorded adjusting entry for January insurance expense (see January 1).

Required

1. Show how each transaction would be accounted for using the accrual basis of accounting. Use the format below for your answer, and show your computations. Give the amount of revenue or expense for January. Journal entries are not required.

Amount of Revenue or Expense for January

Date..............................Revenue (Expense) ..............................Amount

2. Compute January net income or net loss under the accrual basis of accounting.

3. State why the accrual basis of accounting is preferable to the cash basis.