Question

Make one substantive response on this accounting transactions and their respective interpretations.

A proprietor by the name of Chad Wilson, started a rental property business and during the month of June, he completed the following the transactions:

a. The owner opened a business and deposited $30,000 from his personal funds.

      The keywords: Business and deposited.

Since the accounts have been given to you in the accounting equation, which is Assets = Liabilities + Owner's Equity, you are to ensure that the left-side equals the right-side.

It is also possible that you may stay on one-side of the accounting equation. By staying on one-side of the accounting equation, one entry must be a positive and the other number a negative.

In identifying the accounts, in this transaction, we selected 'deposited', which is an asset. Since the money is coming to the business, the cash account of the business will increase by $30,000. The corresponding entry will be $30,000 in Chad Wilson, Capital.

b. The business purchased office supplies on account, $1,800.

     Keywords are Supplies and on account.

     Interpretation: Supplies = Asset = Coming to the business = Asset increases = Debit

                                On account = Accounts payable = Liability = Credit

    Thus, insert $1,800 under Supplies, and insert another $1,800 under Accounts Payable.

c. Received cash from fees earned for managing rental property, $10,000.

    Interpretation:

     Cash = Asset = coming to the business = Increase = Debit

     Fees earned = equity = Increase = Credit.

    Place $10,000 under Supplies and another $10,000 under Fees earned

d. Paid rent on office and equipment for the month, $4,500.

     Keywords:

         Paid = Cash = Asset = Decrease = Credit

         Office and equipment = Asset = Increase = Debit

         Place -$4,500 under Cash, and $4,500 under Office and equipment

e. Paid creditors on account, $1,250.

    Interpretation:

        Paid = Cash = Asset = Decrease = Credit

       Creditor on account = Liability = Decrease = Debit

       Place -$1,250 under cash and place -$1,250 under accounts payable

f. Billed customers for fees earned for managing rental property, $16,800.

    Interpretation:

     Billed = Accounts receivable = Asset = Increase = Debit

    Fees earned = Equity = Increase = Credit

    Place $16,800 under accounts receivable, and place another $16,800 under Fees earned.

g. Paid automobile expenses (including rental charges) for the month, $750, and miscellaneous expenses, $980.

    In this transactions, we have multiple entries. These entries are: (1) Cash, (2) Auto expense, and (3) Miscellaneous expense.

    Interpretation:

            Paid = Cash = Asset = Decrease = Credit

            Auto expense = Equity = Decrease = Debit

            Miscellaneous expense = Equity = Decrease = Debit

            Interpretation:

                 Place -$1,730 = ($750 + $980) under Cash, -$750 under Auto expense, and $980 under Miscellaneous expenses.

h. Paid office salaries, $4,000.

    Interpretation:

      Paid = Cash = Asset = Decrease = Credit

      Office salaries = Equity = Decrease = Debit

      Place -$4,000 under Cash, another -$4,000 under Office Salaries expense

i. Determined that the cost of supplies on hand was $1,120; therefore, the cost of supplies used was $1,120.

      Interpretation:

               Supplies used = Expense = Equity = Debit

                Supplies = Asset = Decrease = Credit

        Place -$1,120 under Supplies, and another -$1,120 under Supplies Expense

j. Withdrew cash for personal use, $7,500

     Interpretation:

        Withdrew cash = Asset = Decrease = Credit

        Withdrew = Equity = Decrease = Debit

      Place -$7,500 under Cash, another -$7,500 under Chad Wilson, Drawing

Answer 1

transaction (amounts in $)	cash	accounts receivable	office supplies	=	accounts payable	capital	fees earned	rent paid	office salaries	automobile expenses	miscellaneous expense
opened business with cash	30000					30000
purchase of office supplies on account			1800		1800
fees earned for managing rental property	10000						10000
paid rent	-4500							-4500
paid creditor on account	-1250				-1250
fees earned and billed customer for it		16800					16800
expenses paid	-1730									-750	-980
office salaries paid	-4000								-4000
withdrawings by cash	-7500					-7500
balance	21020	16800	1800		550	22500	26800	-4500	-4000	-750	-980

			amount ($)	amount ($)
assets			39620
liabilities				550
equity				39070
total			39620	39620