Question

Transactions; Financial Statements On April 1, 2019, Maria Adams established Custom Realty. Maria completed the following transactions during the month of April: a. Opened a business bank account with a deposit of $24,000 from personal funds. b. Paid rent on office and equipment for the month, $3,600. c. Paid automobile expenses (including rental charge) for the month, $1,350, and miscellaneous expenses, $600. d. Purchased office supplies on account, $1,200. e. Earned sales commissions (revenue) from selling real estate, receiving cash, $19,800. f. Paid creditor on account, $750. g. Paid office salaries, $2,500. h. Withdrew cash for personal use, $3,500. i. Determined that the cost of supplies on hand was $300; therefore, the cost of supplies used was $900. 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. If required, enter negative values as negative numbers.

Answer 1

Answer:

Statement of Owner's equity:

Custom Realty
Statement of Owner's Equity
For the Month Ended April 30,2019
Capital 4/1/2019		$0
Investment during the month	$24,000
Net income	$10,850
Less: Drawings	($3,500)
Increase in Owner's equity		$31,350
Capital 4/30/2019		$31,350

Balance Sheet:

Custom Realty
Balance Sheet
April 30,2019
Assets
Cash	$31,500
Office supplies	$300
Total assets	$31,800
Liabilities
Accounts payable	$450
Owner's Equity
Capital	$31,350
Total liabilities and owner's equity	$31,800

Calculations:

i. Calculation of net income:

Income Statement
Revenue		$19,800
Expenses:
Rent expense	$3,600
Automobile expense	$1,350
Miscellaneous expense	$600
Salaries expense	$2,500
Supplies expense	$900
Total expenses		$8,950
Net income		$10,850

ii.T-Accounts:

Cash
$24,000	$3,600
$19,800	$1,350
	$600
	$750
	$2,500
	$3,500
$31,500

Accounts payable
$750	$1,200
	$450