Transactions
On June 1 of the current year, Bret Eisen established a business to manage rental property. He completed the following transactions during June:
a. Opened a business bank account with a deposit of $30,000 in exchange for capital stock.
b. Purchased office supplies on account, $1,200.
c. Received cash from fees earned for managing rental property, $7,200.
d. Paid rent on office and equipment for the month, $3,000.
e. Paid creditors on account, $750.
f. Billed customers for fees earned for managing rental property, $5,000.
g. Paid automobile expenses (including rental charges) for month, $600, and miscellaneous expenses, $300.
h. Paid office salaries, $1,800.
i. Determined that the cost of supplies on hand was $700; therefore, the cost of supplies used was $500.
j. Paid dividends $1,500.
Instructions
1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:
|
Assets
|
-Liabilities+
|
Stockholder's Equity
|
|
Account
|
|
Accounts
|
|
Capital
|
|
|
|
Fees
|
|
Rent
|
|
Salaries
|
|
Auto
|
|
Misc.
|
|
cash+ Receivable + Supplies
|
-
|
Payable
|
+
|
Stock
|
-
|
Dividends
|
+
|
Earned
|
-
|
Expense
|
-
|
Expense
|
-
|
Expense
|
-
|
Expense
|
2. Briefly explain why issuance of capital stock and revenues increased stockholders' equity, while dividends and expenses decreased stockholders' equity.
3. Determine the net income for June.
4. How much did June's transactions increase or decrease retained earnings?