On June 1 of the current year Chad Wilson established a business to manage rental property. He completed the following transactions during June:
On June 1 of the current year Chad Wilson 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 from personal funds.
b. Purchased office supplies on account, $1,800.
c. Received cash from fees earned for managing rental property, $10,000.
d. Paid rent on office and equipment for the month, $4,500.
e. Paid creditors on account, $1,250.
f. Billed customers for fees earned for managing rental property, $16,800.
g. Paid automobile expenses (including rental charges) for the month, $750, and miscellaneous expenses, $980.
h. Paid office salaries, $4,000.
i. Determined that the cost of supplies on hand was $680; therefore, the cost of supplies used was $1,120.
j. Withdrew cash for personal use, $7,500. 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) Assets = Liabilities + – Owners Equity – Salaries Rent Expense Expense Item Cash + Accounts Receivable + Supplies = Accounts Payable – Supplies Expense Auto Expense Misc. Expense a.
b. Bal. 1,250 0 1,800 1,800 C 1,800 30,000 C 30,000 10,000 40,000 -4,500 Chad Wilson, – Chad Wilson, + Fees Earned Capital Drawing 30,000 C C C 30,000 0 0 10,000 30,000 10,000 0 1,800 1,800 30,500 1,800 30,000 10,000 11,800 -1,250 -1,250 34,250 0 1,800 550 30,000 10,000 16,800 16,800 16,800 1,800 550 30,000 26,800 Bal. 9. 34,250 -1,730 32,520 16,800 1,800 550 30,000 26,800 -4,000 28,520 16,800 1 550 30,000 1 0 26,800 O x 0 0 1,800 -1,120 16,800 1 680 550 30,000 1 0 26,800 0x0x 0x0 Bal. 28,520 j -7,500 Bal. (21,020 16,800 680 550 30,000 26,800.
