On March 1, 2006, Tim Cochran established Star Realty, which completed the following transactions during the month:
a. Tim Cochran transferred cash from a personal bank account to an account to be used for the business in exchange for capital stock, $12,000.
b. Purchased supplies on account, $850.
c. Earned sales commissions, receiving cash, $12,600.
d. Paid rent on office and equipment for the month, $2,000.
e. Paid creditor on account, $450.
f. Paid dividends, $1,500.
g. Paid automobile expenses (including rental charge) for month, $1,700, and miscellaneous expenses, $375.
h. Paid office salaries, $3,000.
i. Determined that the cost of supplies used was $605.
Instructions
1. Journalize entries for transactions (a) through (i), using the following accounts: Cash; Supplies; Accounts Payable; Capital Stock; Dividends; Sales Commissions Earned; Office Salaries Expense; Rent Expense; Automobile Expense; Supplies Expense; Miscellaneous Expense. Show the effects of each transaction on the financial statements using the margin notation illustrated in this chapter.
2. Post the journal entries to T accounts, placing the appropriate letter to the left of each amount to identify the transactions. Determine the account balances, after all posting is complete.
3. Prepare a trial balance as of March 31, 2006.
4. Determine the following:
a. Amount of total revenue recorded in the ledger.
b. Amount of total expenses recorded in the ledger.
c. Assuming that no adjustments are necessary, what is the amount of net income for March?