Case $1.$A friend named Tom Tipple has asked what effect certain transactions will have on his company. Time is short, so you cannot apply the detailed procedures of journalizing and posting. Instead, you must analyze the transactions without the use of a journal. Tipple will continue the business only if he can expect to earn monthly net income of $$10,000.$ The following transactions occurred this month:

Tipple deposited $$10,000$ cash in a business bank account, and the corporation issued common shares to him.

Paid $$300$ cash for supplies.

Purchased office furniture on account, $$4,400.$

Earned revenue on account, $$7,000.$

Borrowed $$5,000$ cash from the bank, and signed a note payable due within one year.

Paid the following cash expenses for one month: employee$$s salary, $$1,700$; office rent,$$$$600.$

Collected cash from customers on account, $$1,200.$

Paid on account, $$1,000.$

Earned revenue, and received $$2,500$ cash.

Purchased advertising in the local newspaper for cash, $$800.$

Learning Objectives $135$

Record transactions directly in T$-$accounts, prepare a trial balance, and measure net income or loss; determine which accounts to records transactions in

Requirements

Prepare a trial balance at the current date. List expenses with the largest amount first,$$the next largest amount second, and so on$.$ The business name will be Tipple Networks, Inc.

Compute the amount of net income or net loss for this first month of operations. Why would you recommend that Tipple continue or not continue in business?