Textbook Problem

Transactions; financial statements

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

• a. Opened a business bank account with a deposit of $24,000 in exchange for common stock.
• b. Paid rent on office and equipment for the month, $3,600.
• c. Paid automobile expenses (including rental charge) for month, $1,350, and miscel­laneous expenses, $600.
• d. Purchased office supplies on account, $1,200.
• e. Earned sales commissions, receiving cash, $19,800.
• f. Paid creditor on account, $750.
• g. Paid office salaries. $2,500.
• h. Paid dividends, $3,500.
• i. Determined that the cast of supplies on hand was $300; therefore, the cost of supplies used was $900.

Instructions

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

2. Prepare an income statement for April, a retained earnings statement for April, and balance sheet as of April 30.