On September 1 of the current year, Joy Tucker established a business to manage

Question

On September 1 of the current year, Joy Tucker established a business to manage rental property, She completed the following transactions during September a. Opened a business bank account with a deposit of $49,000 in exchange for common stock b. Purchased office supplies on account, $3,010. C. Received cash from fees earned for managing rental property, $8,240. d. Paid rent on office and equipment for the month, $3,690 e. Paid creditors on account, $1,370 Billed customers for fees earned for managing rental property, $6,840. g Paid automobile expenses for month, $820, and miscellaneous expenses, $410. h. Pald office salaries, $2,600 L Determined that the cost of supplies on hand was $1,780; therefore, the cost of supplies used was $1,230. . Paid dividends $2,460 1. Indicate the effect of each transaction and the balances after each transaction For those boxes in which no entry is required, leave the box blank For those boxes in which you must enter subtractive or negative umbers use a minus sign. (Example: 300) Accounts AccountsSuppliesPayable CommonDividendsEaned Sal. Supp Item Cash Stock Expense ExE 9,000 Bal.49,000

Explanation / Answer

Assets = Liabilities + Stockholders' Equity Item Cash + Accounts Receivable + Supplies Accounts Payable + Common stock - Dividends + Fees Earned - Rent Expense - Sal. Expense - Supp. Expense - Auto Expenses - Misc. Expense Item a.        49,000.0      49,000.0 a. b.        3,010.0        3,010.0 b. Bal.        49,000.0        3,010.0        3,010.0      49,000.0 Bal. c.          8,240.0         8,240.0 c. Bal.        57,240.0        3,010.0        3,010.0      49,000.0         8,240.0 Bal. d.        -3,690.0      3,690.0 d. Bal.        53,550.0        3,010.0        3,010.0      49,000.0         8,240.0      3,690.0 Bal. e.        -1,379.0      -1,379.0 e. Bal.        52,171.0        3,010.0        1,631.0      49,000.0         8,240.0      3,690.0 Bal. f.      6,840.0         6,840.0 f. Bal.        52,171.0      6,840.0        3,010.0        1,631.0      49,000.0      15,080.0      3,690.0 Bal. g.        -1,230.0         820.0         410.0 g. Bal.        50,941.0      6,840.0        3,010.0        1,631.0      49,000.0      15,080.0      3,690.0         820.0         410.0 Bal. h.        -2,600.0      2,600.0 h. Bal.        48,341.0      6,840.0        3,010.0        1,631.0      49,000.0      15,080.0      3,690.0      2,600.0         820.0         410.0 Bal. i.      -1,230.0      1,230.0 i. Bal.        48,341.0      6,840.0        1,780.0        1,631.0      49,000.0      15,080.0      3,690.0      2,600.0      1,230.0         820.0         410.0 Bal. j.        -2,460.0      2,460.0 j. Bal.        45,881.0      6,840.0        1,780.0        1,631.0      49,000.0      2,460.0      15,080.0      3,690.0      2,600.0      1,230.0         820.0         410.0 Bal.                                                                                                 54,501.0                                                                                                                                                                                                                                                       54,501.0 Solution 3: Net Income = Fees earned - Rent expense - sal. expense - supp. expense - Auto expense- Misc. expense = $15080 - $3690- $2600 - $1230 - $820 - $410 = $6330 Solution 4: Increase in retained earnings = Net income - Dividends paid = $6330 - $2460 = $3870

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