Amy Austin established an insurance agency on March 1 of the current year and completed the
-
Amy Austin established an insurance agency on March 1 of the
current year and completed the following transactions during
March:
- Opened a business bank account with a deposit of $50,000 in
exchange for common stock.
- Purchased supplies on account, $4,000.
- Paid creditors on account, $2,300.
- Received cash from fees earned on insurance commissions,
$13,800.
- Paid rent on office and equipment for the month, $5,000.
- Paid automobile expenses for month, $1,150, and miscellaneous
expenses, $300.
- Paid office salaries, $2,500.
- Determined that the cost of supplies on hand was $2,700;
therefore, the cost of supplies used was $1,300.
- Billed insurance companies for sales commissions earned,
$12,500.
- Paid dividends, $3,900.
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. For those boxes in which
you must enter subtractive or negative numbers use a minus sign.
(Example: -300)
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Assets |
= |
Liabilities |
+ |
Stockholders' Equity |
| Item |
Cash |
+ |
Accounts Receivable |
+ |
Supplies |
= |
Accounts Payable |
+ |
Common Stock |
- |
Dividends |
+ |
Fees Earned |
- |
Rent Expense |
- |
Salaries Expense |
- |
Supplies Expense |
- |
Auto Expense |
- |
Miscellaneous Expense |
Item |
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b. |
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Bal. |
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c. |
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Bal. |
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d. |
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Bal. |
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e. |
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Bal. |
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f. |
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Bal. |
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g. |
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Bal. |
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h. |
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Bal. |
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i. |
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Bal. |
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j. |
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Bal. |
2. Stockholders' equity is the right of
stockholders' to the assets of the business. These rights
are by issuing common stock and revenues
and by dividends and expenses.
3. Determine the net income for March.
$
4. How much did March’s transactions increase
or decrease stockholders’ equity?
by $
Check My Work
