Question

On July 1, 2016, Pat Glenn established Half Moon Realty. Pat completed the following transactions during the month of July.

A.	Opened a business bank account with a deposit of $20,000 from personal funds.
B.	Paid rent on office and equipment for the month, $3,200.
C.	Paid automobile expenses (including rental charge) for month, $1,450, and miscellaneous expenses, $700.
D.	Purchased office supplies on account, $1,350.
E.	Earned sales commissions, receiving cash, $20,600.
F.	Paid creditor on account, $750.
G.	Paid office salaries, $2,600.
H.	Withdrew cash for personal use, $4,000.
I.	Determined that the cost of supplies on hand was $500; therefore, the cost of supplies used was $850.

Required:

1.

Indicate the effect of each transaction and the balances after each transaction, using the tabular headings in the exhibit below. In each transaction row (rows indicated by a letter), you must indicate the math sign (+ or -) in columns affected by the transaction. You will not need to enter math signs in the balance rows (rows indicated by Bal.). Entries of 0 (zero) are not required and will be cleared if entered.

Assets		= Liabilities +	Owner’s Equity
			Pat	Pat
		Accounts	Glenn,	Glenn,	Sales	Salaries	Rent	Auto	Supplies	Miscellaneous
Cash	+ Supplies	= Payable	+ Capital	- Drawing	+ Commissions	- Expense	- Expense	- Expense	- Expense	- Expense

2. Prepare an income statement for July, a statement of owner’s equity for July, a balance sheet as of July 31. Refer to the list of Accounts on the accounting equation grid and the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. If a net loss has been incurred, enter that amount as a negative number using a minus sign. You will not need to enter colons (:) on the statements.

Answer 1

                    

				Owners' equity
				+	-	+	-	-	-	-	-
Items	Assets		Liabilities
	Cash	Supplies	Accounts payable	Pat Glen's capital	Pat Glen's drawings	Sales	Salaries	Rent	Auto	Supplies	Miscalenous
						Commissions	Expenses	Expenses	Expenses	Expense	expense
A	20,000.00			20,000.00				3,200.00
B	(3,200.00)
C	(2,150.00)								1,450.00		700.00
D		1,350.00	1,350.00
E	20,600.00					20,600.00
F	(750.00)		(750.00)
G	(2,600.00)						2,600.00
H	(4,000.00)				4,000.00
I		(850.00)								850.00
Balances	27,900.00	500.00	600.00	20,000.00	4,000.00	20,600.00	2,600.00	3,200.00	1,450.00	850.00	700.00

Part 2:

Income statement
	Amount ($)	Amount ($)
Revenues:
Sales commission		20,600.00
Less: Expenditures:
Salaries expenses	2600
Rent expense	3200
Auto expense	1450
Supplies expense	850
Miscellaneous expense	700
		8800
Profit before tax		11,800.00