On June 1 of the current year, Doni Gilmore established a business to manage rental property. She completed the following transactions during June:
a. Opened a business bank account with a deposit of $25,000 from personal funds.
b. Purchased supplies (pens, file folders, and copy paper) on account, $1,150.
c. Received cash from fees earned for managing rental property, $4,500.
d. Paid rent on office and equipment for the month, $1,500.
e. Paid creditors on account, $600.
f. Billed customers for fees earned for managing rental property, $2,250.
g. Paid automobile expenses (including rental charges) for month, $400, and miscellaneous expenses, $180.
h. Paid office salaries, $1,200.
i. Determined that the cost of supplies on hand was $380; therefore, the cost of supplies used was $770.
j. Withdrew cash for personal use, $1,000.
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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Doni
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Doni
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Accounts
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Accounts
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Gilmore,
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Gilmore,
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Fees
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Rent
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Salaries
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Supplies
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Auto
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Misc.
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Cash+
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Receivable+
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Supplies=
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Payable+
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Capital-
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Drawing+
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Earned-
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Expense-
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Expense-
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Expense-
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Expense-
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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.