Question

In: Accounting

Transactions Amy Austin established an insurance agency on March 1 of the current year and completed...

Transactions

Amy Austin established an insurance agency on March 1 of the current year and completed the following transactions during March:

  1. Opened a business bank account with a deposit of $50,000 in exchange for common stock.
  2. Purchased supplies on account, $4,000.
  3. Paid creditors on account, $2,300.
  4. Received cash from fees earned on insurance commissions, $13,800.
  5. Paid rent on office and equipment for the month, $5,000.
  6. Paid automobile expenses for month, $1,150, and miscellaneous expenses, $300.
  7. Paid office salaries, $2,500.
  8. Determined that the cost of supplies on hand was $2,700; therefore, the cost of supplies used was $1,300.
  9. Billed insurance companies for sales commissions earned, $12,500.
  10. Paid dividends, $3,900.

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)

Assets = Liabilities + Stockholders' Equity
Item Cash + Accounts Receivable + Supplies = Accounts Payable + Common 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.

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

3. Determine the net income for March.
$

4. How much did March's transactions increase or decrease retained earnings?
Increased by $

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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