Question

Maria Martinez decides to open a cleaning and laundry service near the local college campus that will operate as a sole proprietorship. Analyze the following transactions for the month of June in terms of their effect on the basic accounting equation. Record each transaction by increasing (+) or decreasing (-) the dollar amount of each item affected. Indicate the new balance of each item after a transaction is recorded. It is not necessary to identify the cause of changes in owner's equity. Transactions (1) (2) (3) (5) (6) (7) (8) (9) Maria Martinez invests $25,000 in cash to start a cleaning and laundry business on June 1. Purchased equipment for $5,000 paying $3.500 in cash and the remainder due in 30 days. Purchased supplies for $1.200 cash. Received a bill from College Clarion for $200 for advertising in the campus newspaper. Cash receipts from customers for cleaning and laundry amounted to $2,600. Paid salaries of $600 to student workers. Billed the Tiger Tennis Team $480 for cleaning and laundry services. Paid $200 to College Clarion for advertising that was previously billed in Transaction 4. Maria Martinez withdrew $1,300 from the business for living expenses. utility expenses for month on account. $500.

Answer 1

Transaction S Account + Receivable + Supplies + Equipment Cash Account Payable Owner's Capital S 25000 25,000 25000 25,000 -3,500 21,500 -1,200 20,300 5,000 5,000 1,500 1,500 25,000 1,200 1,200 5,000 1,500 200 1,700 1,200 5,000 20,300 2,600 22,900 -600 22,300 1,200 5,000 1 Balance 2 Balance 3 Balance 4 Balance 5 Balance 6 Balance 7 Balance 8 Balance 9 Balance 10 Balance 1,700 25,000 -200 24,800 2,600 27,400 -600 26,800 480 27,280 1,200 5,000 1,700 480 480 1,200 5,000 22,300 -200 22,100 -1,300 20,800 1,700 -200 1,500 480 1,200 5,000 480 1,200 5,000 1,500 500 2,000 27,280 -1,300 25,980 -500 25,480 20,800 480 1,200 5,000 Total Assets 27,480 Total Liabilities 27,480 Note: All the expenses and income were route through owner's capital account.