On June 1 of the current year, Maria Edsall established a business to manage ren

Question

On June 1 of the current year, Maria Edsall established a business to manage rental property. She completed the following transactions during June:

Opened a business bank account with a deposit of $32,000 in exchange for capital stock.

Purchased office supplies on account, $2,910.

Received cash from fees earned for managing rental property, $8,280.

Paid rent on office and equipment for the month, $3,570.

Paid creditors on account, $1,320.

Billed customers for fees earned for managing rental property, $6,620.

Paid automobile expenses (including rental charges) for month, $790, and miscellaneous expenses, $400.

Paid office salaries, $2,520.

Determined that the cost of supplies on hand was $1,720; therefore, the cost of supplies used was $1,190.

Paid dividends $2,380.

Required:

1. Indicate the effect of each transaction and the balances after each transaction:
For those boxes in which no entry is required, leave the box blank.
For those boxes in which you must enter subtractive or negative numbers use a minus sign. (Example: -300)

2. Stockholders' equity is the right of stockholders' to the assets of the business. These rights are increased by issuances of capital stock and revenues and decreased by dividends and expenses.

3. Determine the net income for June.
$

4. How much did June's transactions (a-j) increase or decrease retained earnings?

Increased  by $

Assets = Liabilities + Stockholders' Equity Item Cash + Accounts Receivable + Supplies = Accounts Payable + Capital Stock - Dividends + Fees Earned - Rent Expense - Sal. Expense - Supp. Expense - Auto Expense - Misc. Expense Item a. a. b. b. Bal. Bal. c. c. Bal. Bal. d. d. Bal. Bal. e. e. Bal. Bal. f. f. Bal. Bal. g. g. Bal. Bal. h. h. Bal. Bal. i. i. Bal. Bal. j. j. Bal. Bal.

Explanation / Answer

Ans 1 Assets = Liabilities + Stockholders' Equity Item Cash + Accounts Receivable + Supplies = Accounts Payable + Capital Stock - Dividends + Fees Earned - Rent Expense - Sal. Expense - Supp. Expense - Auto Expense - Misc. Expense Item a. 32000 32000 a. b. 2910 2910 b. Bal. Bal. c. 8280 8280 c. Bal. Bal. d. -3570 3570 d. Bal. Bal. e. -1320 -1320 e. Bal. Bal. f. 6620 6620 f. Bal. Bal. g. -1190 790 400 g. Bal. Bal. h. -2520 2520 h. Bal. Bal. i. -1190 1190 i. Bal. Bal. j. -2380 2380 j. Bal. Bal Net Balance 29300 6620 1720 1590 32000 2380 14900 3570 2520 1190 790 400 Ans 3 Net Income= Fees Earned - Rent Expense - Sal. Expense - Supp. Expense - Auto Expense - Misc. Expense = 14900 3570 2520 1190 790 400 Net Income in Jun = $    6,430.00 Ans 4 Retained earning effect on Jun = Tranfer of profit from P/L - dividends paid out =6430-2380 $    4,050.00 So retained earning increased in Jun by $ 6430

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