On June 1 of the current year, Chad Wilson established a business to manage rentalproperty. He completed the following transactions during June:a. Opened a business bank account with a deposit of $30,000 from personal funds.b. Purchased office supplies on account, $1,800.c. Received cash from fees earned for managing rental property, $10,000d. Paid rent on office and equipment for the month, $4,500.e. Paid creditors on account, $1,250.f. Billed customers for fees earned for managing rental property, $16,800g. Paid automobile expenses (including rental charges) for the month, $750, and miscel-laneous expenses, $980.h. Paid officee salaries, $4,000Determined that the cost of supplies on hand was $680; therefore, the cost of suppliesused was $1,120.ij. Withdrew cash for personal use, $7,500Instructions1. Indicate the effect of each transaction and the balances after each transaction, usingthe following tabular headings: Owner's EquityAssets= Liabilities+Chad Wilson,AccountsAccountsChad Wilson,SuppliesEarned Expense - Expense - Expense Expense ExpenseFeesRentSalariesAutoMisc.CashReceivable Supplies= Payable +CapitalDrawingBriefly explain why the owner's investment and revenues increased owner's2.equity, while withdrawals and expenses decreased owner's equity3. Determine the net income for June.4. How much did June's transactions increase or decrease Chad Wilson's capital?

Question
Asked Nov 30, 2019
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On June 1 of the current year, Chad Wilson established a business to manage rental
property. He completed the following transactions during June:
a. Opened a business bank account with a deposit of $30,000 from personal funds.
b. Purchased office supplies on account, $1,800.
c. Received cash from fees earned for managing rental property, $10,000
d. Paid rent on office and equipment for the month, $4,500.
e. Paid creditors on account, $1,250.
f. Billed customers for fees earned for managing rental property, $16,800
g. Paid automobile expenses (including rental charges) for the month, $750, and miscel-
laneous expenses, $980.
h. Paid officee salaries, $4,000
Determined that the cost of supplies on hand was $680; therefore, the cost of supplies
used was $1,120.
i
j. Withdrew cash for personal use, $7,500
Instructions
1. Indicate the effect of each transaction and the balances after each transaction, using
the following tabular headings:
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On June 1 of the current year, Chad Wilson established a business to manage rental property. He completed the following transactions during June: a. Opened a business bank account with a deposit of $30,000 from personal funds. b. Purchased office supplies on account, $1,800. c. Received cash from fees earned for managing rental property, $10,000 d. Paid rent on office and equipment for the month, $4,500. e. Paid creditors on account, $1,250. f. Billed customers for fees earned for managing rental property, $16,800 g. Paid automobile expenses (including rental charges) for the month, $750, and miscel- laneous expenses, $980. h. Paid officee salaries, $4,000 Determined that the cost of supplies on hand was $680; therefore, the cost of supplies used was $1,120. i j. Withdrew cash for personal use, $7,500 Instructions 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:

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Owner's Equity
Assets
= Liabilities+
Chad Wilson,
Accounts
Accounts
Chad Wilson,
Supplies
Earned Expense - Expense - Expense Expense Expense
Fees
Rent
Salaries
Auto
Misc.
CashReceivable Supplies= Payable +
Capital
Drawing
Briefly explain why the owner's investment and revenues increased owner's
2.
equity, while withdrawals and expenses decreased owner's equity
3. Determine the net income for June.
4. How much did June's transactions increase or decrease Chad Wilson's capital?
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Owner's Equity Assets = Liabilities+ Chad Wilson, Accounts Accounts Chad Wilson, Supplies Earned Expense - Expense - Expense Expense Expense Fees Rent Salaries Auto Misc. CashReceivable Supplies= Payable + Capital Drawing Briefly explain why the owner's investment and revenues increased owner's 2. equity, while withdrawals and expenses decreased owner's equity 3. Determine the net income for June. 4. How much did June's transactions increase or decrease Chad Wilson's capital?

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Expert Answer

Step 1

Requirement 1:

Indicate the effect of the given transactions.

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Owner's Equity Liabilities+ Assets Supplies Ex CW Drawing Accounts Accounts Fees Rent Salaries Auto Miscellaneous +CW Capital Cash Supplies Expense Expense Receivable Expense Payable Earned Expense pense (a) (+) $30,000 (b) ()$30,000 ($1,800 (+) $1,800+ $1,800 $30,000 $30,000 Bal c) (+)S10,000 $40,000 $1,800 (+)S10,000 $10,000 $30,000 Bal (d) $1,800 S1,800 ($4,500 Bal $4,500 $1,800 () $1,250 + $35,500 $1,800 $30,000 $10,000 S4,500 (e) ($1,250 Bal $10,000$4,500 (+$16,800 $26,800 $34,250 $1,800 $550 $30,000 ($16,800 S16,800 $34,250 (1,730 $32,520 Bal $1,800 $550 $30,000 $4,500 + ( $980 ()$980 ($750 ( $750- $26,800 $4,500 Bal $30,000 $16,800 $1,800 $550 + - () $4,000 $4.000 (h) Bal ($4,000 $30,000 $28,520 ()$750 $16,800 $1,800 + () $1,120 $550 + $26,800$4,500 ($980 ()$1,120 $1,120 ($750 Bal $30,000 $28,520 $7,500 $21,020 $16,800 S680 $550 $26,800 S4,500 $4,000 ()$980 )$7,500 $7.500 SL120 $750- Bal $16,800 S680 S550+ $4.000 $30.000 $26.800 $4.500 $980

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Step 2

Requirement 2:

Explain the reason for increase in owner's equity due to owner's investment and revenue, and decrease in owner's equity due to withdrawals and expenses.

Owner’s investment in the business and revenue earned during the period increases the owner's equity, as they increase the value of resources of the business, on which the owner has the claim. Similarly, the owner's withdrawals from the business and expenses incurred during the period, decreases the owner's equity, as they decrease the value of resources of the business, on which the owner has the claim.

Step 3

Requirement 3:

Calculate the net income for the mon...

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Income Statement June 30, 2017 Amount Amount Particulars (S) ($) Revenues Fees Earned $26,800 Expenses Rent expense Salaries expense Automobile expense Supplies expense Miscellaneous expense Total expenses Net income $4,500 $4,000 $750 $1,120 $980 $11,350 $15,450 Table (1) Hence, the net income for the month ended June 30, 2017, is $15.450

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