On June 1 of the current year, Chad Wilson established a business to manage
rental property. He completed the following transactions during June:
Opened a business bank account with a deposit of $30,000 from personal
funds.
Purchased office supplies on account, $1,800.
Received cash from fees earned for managing rental property, $10,000.
Paid rent on office and equipment for the month, $4,500.
Paid creditors on account, $1,250.
Billed customers for fees earned for managing rental property, $16,800.
Paid automobile expenses (including rental charges) for the month, $750, and
miscellaneous expenses, $980.
Paid office salaries, $4,000.
Determined that the cost of supplies on hand was $680; therefore, the cost of
supplies used was $1,120. Withdrew cash for personal use, $7,500.
Required:
1. Indicate the effect of each transaction and the balances after each transaction.
Assets = Liabilities + Owner's Equity
Item Cash + Accounts + Supplies = Accounts + Chad - Chad + Fees
Receivable Payable Wilson, Wilson, Earned
Capital Drawing
2. Owner's equity is the right of owners to the assets of the business. These
rights are increased by owner's investments and revenues and decreased by
owner's withdrawals and expenses.
3. Determine the net income for June.
4. June's transactions (a-j) increased or decreased Chad Wilson’s capital to: