Transactions; financial statements
On October 1, 2014, Kevin Bosley established Sunrise Realty. Kevin completed the following transactions during the month of October:
1. Opened a business bank account with a deposit of $18,000 in exchange for capital stock.
2. Purchased office supplies on account, $3,200.
3. Paid creditor on account, $1,800.
4. Earned sales commissions, receiving cash, $36,750.
5. Paid rent on office and equipment for the month, $4,000.
6. Paid dividends, $3,000.
7. Paid automobile expenses (including rental charge) for month, $2,500, and miscellaneous expenses, $1,200.
8. Paid office salaries, $3,750.
9. Determined that the cost of supplies on hand was $1,550; therefore, the cost of supplies used was $1,650.
Instructions
1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:
|
Assets |
– |
Liabilities |
+ |
Stockholder’s equity |
||||||||||||||
|
Cash + Supplies |
– |
Accounts Payable |
+ |
Capital Stock |
– |
Dividends |
+ |
Sales Commissions |
– |
Rent Expense |
– |
Salaries Expense |
– |
Auto Expense |
– |
Supplies Expense |
– |
Misc. Expense |
2. Prepare an income statement for October, a retained earnings statement for October, and a balance sheet as of October 31.