Homework SourseTransactions On June 1 of the current year Chad Wilson estab
Transactions
On June 1 of the current year, Chad Wilson established a business to manage rental property. He completed the following transactions during June:
Opened a business bank account with a deposit of $35,000 from personal funds.
Purchased office supplies on account, $2,050.
Received cash from fees earned for managing rental property, $5,600.
Paid rent on office and equipment for the month, $2,510.
Paid creditors on account, $930.
Billed customers for fees earned for managing rental property, $4,650.
Paid automobile expenses (including rental charges) for the month, $560, and miscellaneous expenses, $280.
Paid office salaries, $1,770.
Determined that the cost of supplies on hand was $1,210; therefore, the cost of supplies used was $840.
Withdrew cash for personal use, $1,670.
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)
2. Owner\'s equity is the right of owners to the assets of the business. These rights are by owner\'s investments and revenues and by owner\'s withdrawals and expenses.
3. Determine the net income for June.
$
4. June\'s transactions (a-j) increased or decreased Chad Wilson\'s capital to?
to $
| Assets | = | Liabilities | + | Owner\'s Equity | |||||||||||||||||||
| Item | Cash | + | Accounts Receivable | + | Supplies | = | Accounts Payable | + | Chad Wilson, Capital | - | Chad Wilson, Drawing | + | Fees Earned | - | Rent Expense | - | Salaries Expense | - | Supplies Expense | - | Auto Expense | - | Misc. Expense |
| a. | |||||||||||||||||||||||
| b. | |||||||||||||||||||||||
| Bal. | |||||||||||||||||||||||
| c. | |||||||||||||||||||||||
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| d. | |||||||||||||||||||||||
| Bal. | |||||||||||||||||||||||
| e. | |||||||||||||||||||||||
| Bal. | |||||||||||||||||||||||
| f. | |||||||||||||||||||||||
| Bal. | |||||||||||||||||||||||
| g. | |||||||||||||||||||||||
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| h. | |||||||||||||||||||||||
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| i. | |||||||||||||||||||||||
| Bal. | |||||||||||||||||||||||
| j. | |||||||||||||||||||||||
| Bal. |
Solution
1.
Assets
=
Liabilities
+
Owner\'s Equity
Item
Cash
+
Accounts Receivable
+
Supplies
=
Accounts Payable
+
Chad Wilson, Capital
-
Chad Wilson, Drawing
+
Fees Earned
-
Rent Expense
-
Salaries Expense
-
Supplies Expense
-
Auto Expense
-
Misc. Expense
a.
35,000
35,000
b.
2,050
2,050
Bal.
35,000
2,050
2,050
35,000
c.
5,600
5,600
Bal.
40,600
2,050
2,050
35,000
5,600
d.
-2,510
2,510
Bal.
38,090
2,050
2,050
35,000
5,600
2,510
e.
-930
-930
Bal.
37,160
2,050
1,120
35,000
5,600
2,510
f.
4,650
4,650
Bal.
37,160
4,650
2,050
1,120
35,000
10,250
2,510
g.
-840
560
280
Bal.
36,320
4,650
2,050
1,120
35,000
10,250
2,510
560
280
h.
-1,770
1,770
Bal.
34,550
4,650
2,050
1,120
35,000
10,250
2,510
1,770
560
280
i.
-840
840
Bal.
34,550
4,650
1,210
1,120
35,000
10,250
2,510
1,770
840
560
280
j.
-1,670
+
+
=
+
-
1,670
+
-
-
-
-
-
Bal.
32,880
+
4,650
+
1,210
=
1,120
+
35,000
-
1,670
+
10,250
-
2,510
-
1,770
-
840
-
560
-
280
3. Net Income for June = Fees Earned - Rent Expenses - Salaries expenses - supplies expenses- Auto Expenses - miscellaneous expenses
= 10,250 - 2,510 - 1,770 - 840 - 560 - 280
= $4,290
4. June\'s trascation increased Chad Wilson\'s capital.
Net Increase in capital = Opening capital - closing capital - Drawings + net income
= 35,000 - 35,000 - 1,670 + 4,290
= 2,620
| Assets | = | Liabilities | + | Owner\'s Equity | |||||||||||||||||||
| Item | Cash | + | Accounts Receivable | + | Supplies | = | Accounts Payable | + | Chad Wilson, Capital | - | Chad Wilson, Drawing | + | Fees Earned | - | Rent Expense | - | Salaries Expense | - | Supplies Expense | - | Auto Expense | - | Misc. Expense |
| a. | 35,000 | 35,000 | |||||||||||||||||||||
| b. | 2,050 | 2,050 | |||||||||||||||||||||
| Bal. | 35,000 | 2,050 | 2,050 | 35,000 | |||||||||||||||||||
| c. | 5,600 | 5,600 | |||||||||||||||||||||
| Bal. | 40,600 | 2,050 | 2,050 | 35,000 | 5,600 | ||||||||||||||||||
| d. | -2,510 | 2,510 | |||||||||||||||||||||
| Bal. | 38,090 | 2,050 | 2,050 | 35,000 | 5,600 | 2,510 | |||||||||||||||||
| e. | -930 | -930 | |||||||||||||||||||||
| Bal. | 37,160 | 2,050 | 1,120 | 35,000 | 5,600 | 2,510 | |||||||||||||||||
| f. | 4,650 | 4,650 | |||||||||||||||||||||
| Bal. | 37,160 | 4,650 | 2,050 | 1,120 | 35,000 | 10,250 | 2,510 | ||||||||||||||||
| g. | -840 | 560 | 280 | ||||||||||||||||||||
| Bal. | 36,320 | 4,650 | 2,050 | 1,120 | 35,000 | 10,250 | 2,510 | 560 | 280 | ||||||||||||||
| h. | -1,770 | 1,770 | |||||||||||||||||||||
| Bal. | 34,550 | 4,650 | 2,050 | 1,120 | 35,000 | 10,250 | 2,510 | 1,770 | 560 | 280 | |||||||||||||
| i. | -840 | 840 | |||||||||||||||||||||
| Bal. | 34,550 | 4,650 | 1,210 | 1,120 | 35,000 | 10,250 | 2,510 | 1,770 | 840 | 560 | 280 | ||||||||||||
| j. | -1,670 | + | + | = | + | - | 1,670 | + | - | - | - | - | - | ||||||||||
| Bal. | 32,880 | + | 4,650 | + | 1,210 | = | 1,120 | + | 35,000 | - | 1,670 | + | 10,250 | - | 2,510 | - | 1,770 | - | 840 | - | 560 | - | 280 |
