Problem
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 from personal funds.
B. Purchased office supplies on account, $1,200.
C. Received cash from fees earned from 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. Withdrew cash for personal use, $1,500
Instructions:
1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:
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Assets
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= Liabilities +
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Owner's Equity
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Cash + Accounts Receivable + Supplies =
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Accounts Payable +
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Bret Eisen, Capital -
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Bret Eisen Drawing +
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Fees Earned -
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Rent Expense -
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Salaries Expense -
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Supplies Expense -
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Auto Expense -
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Misc. Expense
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2. Briefly explain why the owner's investment and revenues increased owner's equity, while withdrawals and expenses decreased owner?s equity.
3. Determine the net income for June.
4. How much did June's transactions increase or decrease Bret Eisen's capital?