Warren Enterprises, Corp., completed the following selected transactions and prepared these adjusting entries during January:
Jan 1 Prepaid insurance for January through March, $2,700.
3 Performed service on account, $2,700.
6 Purchased office furniture on account, $1,700.
8 Paid property tax expense, $500.
12 Purchased office equipment for cash, $1,200.
18 Performed services and received cash, $1,100.
23 Collected $700 on account.
26 Paid the account payable from the January 6 transaction.
30 Paid salaries expense, $1,400.
31 Recorded an adjusting entry for January insurance expense related to the January 1 transaction.
31 Recorded an adjusting entry for unearned revenue now earned, $700.

Requirements
1. State whether the transaction would increase revenues, decrease revenues, increase expenses, decrease expenses, or have no effect on revenues or expenses. If revenues or expenses are affected, give the amount of the impact on revenues or expenses for January. Use the following format for your answer.

2. Compute January net income or net loss under the accrual basis of accounting.
3. State why the accrual basis of accounting results in an accurate measurement ofincome.

Transcribed Image Text:

Revenues and Expenses for January Date Jan XX Impact on Revenues or Expenses Increase Revenues $Effect on Revenues or Expenses SXXX