Question

Transactions

On September 1 of the current year, Joy Tucker established a business to manage rental property. She completed the following transactions during September:

1. Opened a business bank account with a deposit of $31,000 in exchange for common stock.
2. Purchased office supplies on account, $3,010.
3. Received cash from fees earned for managing rental property, $8,470.
4. Paid rent on office and equipment for the month, $3,700.
5. Paid creditors on account, $1,370.
6. Billed customers for fees earned for managing rental property, $6,860.
7. Paid automobile expenses for month, $820, and miscellaneous expenses, $410.
8. Paid office salaries, $2,610.
9. Determined that the cost of supplies on hand was $1,780; therefore, the cost of supplies used was $1,230.
10. Paid dividends $2,470.

Required:

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 numbers use a minus sign. (Example: -300)

Assets

=

Liabilities

+

Stockholders' Equity

Item

Cash

+

Accounts Receivable

+

Supplies

=

Accounts Payable

+

Common Stock

-

Dividends

+

Fees Earned

-

Rent Expense

-

Sal. Expense

-

Supp. Expense

-

Auto Expense

-

Misc. Expense

Item

a.

a.

b.

b.

Bal.

Bal.

c.

c.

Bal.

Bal.

d.

d.

Bal.

Bal.

e.

e.

Bal.

Bal.

f.

f.

Bal.

Bal.

g.

g.

Bal.

Bal.

h.

h.

Bal.

Bal.

i.

i.

Bal.

Bal.

j.

j.

Bal.

Bal.

2. Stockholders' equity is the right of stockholders' to the assets of the business. These rights are   by issuances of capital stock and revenues and   by dividends and expenses.

3. Determine the net income for September.

Answer 1

Answer 1.

Assets Accounts Receivabl Cash Stockholders' Equity Rent Salaries Expense Expense Supplies Dividends + Common Stock 31000 Fees Earned Supplies Expense Auto Expense Liabilities + Accounts Payable | + 3010 + 3010 + Misc. Expense a. 31000 + 3010 3010 Bal. 0 + = 31000 + 8470 3010 3010 + 31000 8470 Bal. d. Bal. e Bal. 31000 84 70 39470 -3700 35770 -1370 34400 + + + + + + 3700 3700 3010 = | 31000 8470 3010 -1370 1640 + + + 400 + + 3010 = 31000 3700 6860 6860 8470 6860 15330 Bal. + 3010 1640 + 31000 3700 34400 -1230 33170 -2610 30560 + + + + + 410 410 6860 + 3010 = 1640 + 31000 + 153 30 3700 - 0 2610 2610 Bal. 6860 + 1640 + 1 31000 + 15330 3700 - 820 - 410 3010 -1230 1780 1230 1230 - - 6860 | 1640 + 31000 15330 3700 2610 - 820 410 Bal. 30560 -2470 Bal. 28090 + + + 0 2470 2470 + + || + 6860 + 1780 = 1640 1- - + 31000 15330 - 3700 - 2610 - 1230 - 820 - 410

Answer 2.

Stockholders' equity is the right of stockholders' to the assets of the business. These rights are increased by issuances of capital stock and revenues and decreased by dividends and expenses.

Answer 3.

Net income = Fees earned - Rent expense - Salaries expense - Supplies expense - Automobile expenses - Miscellaneous expense
Net income = $15,330 - $3,700 - $2,610 - $1,230 - $820 - $410
Net income = $6,560