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On July 1, 2016, Pat Glenn established Half Moon Realty. Pat completed the following transactions during the month of July: a. Opened a business bank account with a deposit of $25,000 from personal funds. b. Purchased office supplies on account, $1,850. c. Paid creditor on account, $1,200. d. Earned sales commissions, receiving cash, $41,500. e. Paid rent on office and equipment for the month, $3,600. f. Withdrew cash for personal use, $4,000. g. Paid automobile expenses (including rental charge) for month, $3,050, and miscellaneous 1. expenses, $1,600. h. Paid office salaries, $5,000. i. Determined that the cost of supplies on hand was $950; 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 July, a statement of owner’s equity for July, and a balance sheet as of July 31.

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Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305088436

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BuyFindarrow_forward

Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305088436
Chapter 1, Problem 4PA
Textbook Problem
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On July 1, 2016, Pat Glenn established Half Moon Realty. Pat completed the following transactions during the month of July:

  1. a. Opened a business bank account with a deposit of $25,000 from personal funds.
  2. b. Purchased office supplies on account, $1,850.
  3. c. Paid creditor on account, $1,200.
  4. d. Earned sales commissions, receiving cash, $41,500.
  5. e. Paid rent on office and equipment for the month, $3,600.
  6. f. Withdrew cash for personal use, $4,000.
  7. g. Paid automobile expenses (including rental charge) for month, $3,050, and miscellaneous
  8. 1. expenses, $1,600.
  9. h. Paid office salaries, $5,000.
  10. i. Determined that the cost of supplies on hand was $950; 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 4PA, On July 1, 2016, Pat Glenn established Half Moon Realty. Pat completed the following transactions

  1. 2. Prepare an income statement for July, a statement of owner’s equity for July, and a balance sheet as of July 31.

1)

To determine

Indicate the effect of each given transaction of Company HMR on the accounting equation.

Explanation of Solution

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 act...

2)

To determine

Prepare financial statements for Company HMR for the month ended July 31, 2016.

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Financial Accounting
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