On April 1, 2014 Maria Adams etablished Custom Realty. Maria completed the following transactions...
Question:
On April 1, 2014 Maria Adams etablished Custom Realty.
Maria completed the following transactions during the month of April:
| A. | Opened a business bank account with a deposit of $24,000 from personal funds. |
| B. | Paid rent on office and equipment for the month $3,600. |
| C. | Paid automobile expenses (including rental charge) for month $1,350 and misc. expenses $600. |
| D. | Purchased office supplies on account $1,200. |
| E. | Earned sales commissions, receiving cash $19,800. |
| F. | Paid creditor on account $750. |
| G. | Paid office salaries $2,500. |
| H. | Withdrew cash for personal use $3,500. |
| I. | Determined that the cost of supplies on hand was $300; therefore; the cost of supplies used was $900. |
Required:
1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:
| Assets = Liabilities + Owners Equity |
| Cash + Supplies = Accounts Payable + Capital - Drawing + Sales Commissions - Rent - Salaries - Auto - Supplies - Misc. |
2. Prepare an Income Statement for April, a Statement of Owners' Equity for April and a Balance Sheet as of April 30.
Financial Statements:
Financial statements are reports issued by a business in relation to its financial activities as of/and during the reporting period. The major financial statements include, among others, balance sheet, income statement, and statement of cash flows.
Answer and Explanation: 1
| Transaction | Cash + | Supplies = | Accounts payable + | Capital - | Drawing + | Sales commissions - | Rent - | Salaries - | Auto - | Supplies - | Miscellaneous |
|---|---|---|---|---|---|---|---|---|---|---|---|
| a | 24,000 | 24,000 | |||||||||
| b | (3,600) | 3,600 | |||||||||
| c | (1,950) | 1,350 | 600 | ||||||||
| d | 1,200 | 1,200 | |||||||||
| e | 19,800 | 19,800 | |||||||||
| f | (750) | (750) | |||||||||
| g | (2,500) | 2,500 | |||||||||
| h | (3,500) | 3,500 | |||||||||
| i | (900) | 900 | |||||||||
| Total | 31,500 | 300 | 450 | 24,000 | 3,500 | 19,800 | 3,600 | 2,500 | 1,350 | 900 | 600 |
| Income Statement | |
|---|---|
| Sales commissions | 19,800 |
| Less: Expenses | |
| Rent | 3,600 |
| Salaries | 2,500 |
| Automobile | 1,350 |
| Supplies | 900 |
| Miscellaneous | 600 |
| Net income | 10,850 |
| Statement of Owner's Equity | |
|---|---|
| Maria Adams, Capital -beginning | 24,000 |
| Less: Drawings | (3,500) |
| Add; Net income | 10,850 |
| Maria Adams, Capital -ending | 31,350 |
| Balance Sheet | |||
|---|---|---|---|
| Assets | Liabilities and Owner's Equity | ||
| Cash | 31,500 | Accounts Payable 450 | |
| Supplies | 300 | ||
| Owner's Equity 31,350 | |||
| Total Assets | 31,800 | Total Liabilities and Owner's Equity 31,800 |
Learn more about this topic:
from
Chapter 2 / Lesson 1Learn about the types and importance of financial statements. See the financial statement definition, and study the purpose of financial statements.