Question

On August 1, 2018, Brooke Kline established Western Realty. Brooke completed the following transactions during the month of August.

A.	Opened a business bank account with a deposit of $24,000 in exchange for common stock.
B.	Purchased office supplies on account, $2,100.
C.	Paid creditor on account, $1,200.
D.	Earned sales commissions, receiving cash, $38,000.
E.	Paid rent on office and equipment for the month, $2,400.
F.	Paid dividends, $3,700.
G.	Paid automobile expenses (including rental charge) for month, $3,200, and miscellaneous expenses, $1,700.
H.	Paid office salaries, $4,100.
I.	Determined that the cost of supplies on hand was $1,000; therefore, the cost of supplies used was $1,100.

Required:

1.

Indicate the effect of each transaction and the balances after each transaction, using the tabular headings in the exhibit below. In each transaction row (rows indicated by a letter), you must indicate the math sign (+ or -) in columns affected by the transaction. You will not need to enter math signs in the balance rows (rows indicated by Bal.). Entries of 0 (zero) are not required and will be cleared if entered.

Assets		= Liabilities +	Stockholders’ Equity
		Accounts	Common		Sales	Salaries	Rent	Auto	Supplies	Miscellaneous
Cash	+ Supplies	= Payable	+ Stock	- Dividends	+ Commissions	- Expense	- Expense	- Expense	- Expense	- Expense

	2. a. Prepare an income statement for August. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Refer to the list of Labels, Accounts and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. You will not need to enter colons (:) on the income statement.
	2. b. Prepare a retained earnings statement for August. Refer to the list of Labels, Accounts and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. The word “Less” or “Add” is not needed in the Retained Earnings Statement. If an amount is zero, enter "0".
	2. c. Prepare a balance sheet as of August 31. Refer to the list of Labels, Accounts and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.

Answer 1

Ans-

	Assets		=Liabilities +	Stockholders' Equity
S.No.	Cash	+Supplies	=Accounts Payable	+Common Stock	-Dividends	+Sales Commission	-Salaries Expenses	-Rent Expenses	-Auto Expenses	-Supplies Expenses	-Miscellaneous Expenses
A.	24,000			24,000
Balance	24,000			24,000
B.		2,100	2,100
Balance	24,000	2,100	2,100	24,000
C.	-12,00		-1,200
Balance	22,800	2,100	900	24,000
D.	38,000					38,000
Balance	60,800	2,100	900	24,000		38,000
E.	-2,400							2,400
Balance	58,400	2,100	900	24,000		38,000		2,400
F.	-3,700				3,700
Balance	54,700	2,100	900	24,000	3,700	38,000		2,400
G.	-4,900								3,200		1,700
Balance	49,800	2,100	900	24,000	3,700	38,000		2,400	3,200		1,700
H.	-4,100						4,100
Balance	45,700	2,100	900	24,000	3,700	38,000	4,100	2,400	3,200		1,700
I.		-1,100								1,100
Balance	45,700	1,000	900	24,000	3,700	38,000	4,100	2,400	3,200	1,100	1,700
	Assets $46,700		Liabilities $900	+ Stockholders' Equity $45,800

Income Statement

Sales Commission Revenue		$38,000
Expenses:-
Rent Expenses	$2,400
Salaries Expenses	$4,100
Auto Expenses	$3,200
Supplies Expenses	$1,100
Misc. Expenses	$1,700	$12,500
Net Income ($38,000-$12,500)		$25,500

Statement of Retained Earnings

Beginning Balance	0
Add: Net Income	$25,500
Less: Dividend	$3,700
Ending Balance	21,800

Balance Sheet

Assets:-
Cash	$45,700
Supplies	$1,000
Total Assets		$46,700
Liabilities:-
Accounts Payable		900
Stockholders' Equity:-
Common Stock	$24,000
Retained Earnings	$21,800	$45,800
Total Liabilities and Stockholder's Equity		$46,700

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