On January 1, 2019, Sharon Matthews established Tri-City Realty, which completed

Question

On January 1, 2019, Sharon Matthews established Tri-City Realty, which completed the following transactions during the month:

Required:

Jan. 1 Sharon Matthews transferred cash from a personal bank account to an account to be used for the business, $31,500. 2 Paid rent on office and equipment for the month, $2,750. 3 Purchased supplies on account, $2,350. 4 Paid creditor on account, $800. 5 Earned fees, receiving cash, $16,160. 6 Paid automobile expenses (including rental charge) for month, $1,640, and miscellaneous expenses, $450. 7 Paid office salaries, $2,400. 8 Determined that the cost of supplies used was $1,150. 9 Withdrew cash for personal use, $2,000.

Explanation / Answer

Solution 1:

Solution 2:

Solution 3:

Solution 4:

Amount of total revenue = $16,160

Amount of total expenses = $2,750 + $1,640 + $450 + $2,400 + $1,150

= $8,390

Net Income = Revenue - expenses = $16,160 - $8,390 = $7,770

Solution 5:

Increase or decrease in owner's equity = Net Income - drawings = $7,770 - $2,000 - $5,770 increase

Journal Entries - Tri City Reality Date Particulars Debit Credit 1-Jan Cash Dr $31,500.00       To Owner's capital $31,500.00 (To record cash invested in business) 2-Jan Rent Expense Dr $2,750.00       To Cash $2,750.00 (To record payment of rent) 3-Jan Supplies Dr $2,350.00       To Accounts payable $2,350.00 (To record purchase of supplies on account) 4-Jan Accounts payable Dr $800.00       To Cash $800.00 (To record payment to creditors) 5-Jan Cash Dr $16,160.00       To Fees earned $16,160.00 (To record cash received for fees) 6-Jan Automobile expenses Dr $1,640.00 Miscellenous expenses Dr $450.00       To Cash $2,090.00 (To record expenses) 7-Jan Salaries Expense Dr $2,400.00       To Cash $2,400.00 (To record office salaries) 8-Jan Supplies expense Dr $1,150.00       To Supplies $1,150.00 (To record supplies consumed) 9-Jan Owner Drawings Dr $2,000.00       To Cash $2,000.00 (To record cash withdrawl for personal use)

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