Recording Transactions Carmen Bay Company sells a variety of souvenirs to tourists on the beach. Teenagers are paid 20 percent of the sales price to hawk the wares up and down the beach and are paid daily. The company was formed only recently and given approval by the local city council to operate. The following events are the first in the company’s short history:
1. The company was formed when Carmen Bay contributed $2,150 to the firm.
2. A local bank loaned the firm $4,000 in exchange for the firm’s one year note payable.
3. Merchandise costing $4,100 was purchased with cash.
4. Goods costing $825 were sold to tourists for a total of $2,250 in cash, and the teenagers were paid their commissions.
5. A payment of $1,500 was made to the local bank on the note payable.
6. Carmen Bay withdrew $500 cash for personal use (Hint: reduce retained earnings). Assume the company uses the following set of accounts:
|
Cash |
Notes Payable |
|
Cost of Sales |
Merchandise Inventory |
|
Sales |
Contributed Capital |
|
Retained Earnings |
Commissions Expense |
Required Determine how each event affects the company, and record the events using the format shown below.
|
ASSETS |
= |
LIABILITIES |
+ |
OWNERS’ EQUITY |
||||
|
Cash |
Other |
Contributed |
Retained |
|||||
|
Date |
Accounts |
0 |
+0 |
= |
0 |
+ |
0 |
+0 |
|
Beginning Amounts |