Question

On April 1 of the current year, Morgan Jones established a business to manage rental property. She completed the following transactions during April:

1. Opened a business bank account with a deposit of $29,000 in exchange for common stock.
2. Purchased office supplies on account, $2,880.
3. Received cash from fees earned for managing rental property, $7,800.
4. Paid rent on office and equipment for the month, $3,540.
5. Paid creditors on account, $1,310.
6. Billed customers for fees earned for managing rental property, $6,550.
7. Paid automobile expenses for month, $790, and miscellaneous expenses, $390.
8. Paid office salaries, $2,490.
9. Determined that the cost of supplies on hand was $1,700; therefore, the cost of supplies used was $1,180.
10. Paid dividends, $2,360.

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 (owners) to the assets of the business. These rights are   by issuing common stock and revenues and   by dividends and expenses.

3. Determine the net income for April.
$

4. How much did April’s transactions increase or decrease stockholders’ equity?
  by $

Answer 1

	Assets						Liabilities		Shareholder's Equity
Item	Cash	+	Accounts Receivable	+	Supplies	=	Accounts Payable	+	Common Stock	-	Dividends	+	Fees Earned	-	Rent Expense	-	Sal. Expense	-	Supp. Expense	-	Auto Expense	-	Misc. Expense
a)	$ 29,000.00								$ 29,000.00
b)					$ 2,880.00		$ 2,880.00
Balance	$ 29,000.00		$             -		$ 2,880.00		$ 2,880.00		$ 29,000.00		$              -		$               -		$              -		$              -		$              -		$           -		$           -
c)	$   7,800.00												$   7,800.00
Balance	$ 36,800.00		$             -		$ 2,880.00		$ 2,880.00		$ 29,000.00		$              -		$   7,800.00		$              -		$              -		$              -		$           -		$           -
d)	$ (3,540.00)														$(3,540.00)
Balance	$ 33,260.00		$             -		$ 2,880.00		$ 2,880.00		$ 29,000.00		$              -		$   7,800.00		$(3,540.00)		$              -		$              -		$           -		$           -
e)	$ (1,310.00)						$(1,310.00)
Balance	$ 31,950.00		$             -		$ 2,880.00		$ 1,570.00		$ 29,000.00		$              -		$   7,800.00		$(3,540.00)		$              -		$              -		$           -		$           -
f)			$ 6,550.00										$   6,550.00
Balance	$ 31,950.00		$ 6,550.00		$ 2,880.00		$ 1,570.00		$ 29,000.00		$              -		$ 14,350.00		$(3,540.00)		$              -		$              -		$           -		$           -
g)	$ (1,180.00)																				$(790.00)		$(390.00)
Balance	$ 30,770.00		$ 6,550.00		$ 2,880.00		$ 1,570.00		$ 29,000.00		$              -		$ 14,350.00		$(3,540.00)		$              -		$              -		$(790.00)		$(390.00)
h)	$ (2,490.00)																$(2,490.00)
Balance	$ 28,280.00		$ 6,550.00		$ 2,880.00		$ 1,570.00		$ 29,000.00		$              -		$ 14,350.00		$(3,540.00)		$(2,490.00)		$              -		$(790.00)		$(390.00)
i)					$(1,180.00)														$(1,180.00)
Balance	$ 28,280.00		$ 6,550.00		$ 1,700.00		$ 1,570.00		$ 29,000.00		$              -		$ 14,350.00		$(3,540.00)		$(2,490.00)		$(1,180.00)		$(790.00)		$(390.00)
j)	$ (2,360.00)										$(2,360.00)
Balance	$ 25,920.00		$ 6,550.00		$ 1,700.00		$ 1,570.00		$ 29,000.00		$(2,360.00)		$ 14,350.00		$(3,540.00)		$(2,490.00)		$(1,180.00)		$(790.00)		$(390.00)

3)	Net Income
	Fees Earned			$ 14,350.00
Less:	Expenses
	Rent Expense		$(3,540.00)
	Sal. Expense		$(2,490.00)
	Supp. Expense		$(1,180.00)
	Auto Expense		$    (790.00)
	Misc. Expense		$    (390.00)	$ (8,390.00)
	Net Income			$   5,960.00

4)	Stockholder's Equity Increased by
	Issue of common stock			$ 29,000.00
Add:	Net Income			$   5,960.00
Less:	Dividend paid			$ (2,360.00)
				$ 32,600.00

Just let me know if you find anything incorrect, will surely make it correct for you