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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Transactions; financial statements

On April 1, 2016, Maria Adams established Custom Realty. Maria completed the following transactions during the month of April:

  1. a. Opened a business bank account with a deposit of $24, 000 from personal funds.
  2. b. Paid rent on office and equipment for the month, $3,600.
  3. c. Paid automobile expenses (including rental charge) for month, $1,350, and miscellaneous expenses, $600.
  4. d. Purchased office supplies on account, $1,200.
  5. e. Earned sales commissions, receiving cash, $19,800.
  6. f. Paid creditor on account, $750.
  7. g. Paid office salaries, $2,500.
  8. h. Withdrew cash for personal use, $3,500.
  9. i. Determined that the cost of supplies on hand was $300; therefore, the cost of supplies used was $900.

Instructions

  1. 1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:

Chapter 1, Problem 1.4BPR, Transactions; financial statements On April 1, 2016, Maria Adams established Custom Realty. Maria

  1. 2. Prepare an income statement for April, a statement of owner’s equity for April, and a balance sheet as of April 30.

1)

To determine

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Shareholders' Equity

Business transaction:

Business transaction is a record of any economic activity, resulting in the change in the value of the assets, the liabilities, and the Shareholder’s equities, of a business. Business transaction is also referred to as financial transaction.

To Indicate: The effect of each given transaction of Company CR on the accounting equation.

Explanation

Indicate the effect of the given transactions of Company CR

2)

To determine

To Prepare: The income statement and statement of owners’ equity for the month ended April 30, 2016 and balance sheet as of April 30, 2016 for Company CR.

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