on september 1 of the current year maria edsall established a business to manage ren 551148

PR 1-1A Transactions

On September 1 of the current year, Maria Edsall established a business to manage rental property. She completed the following transactions during September:

a. Opened a business bank account with a deposit of $40,000 from personal funds.

b. Purchased supplies (pens, file folders, and copy paper) on account, $2,200.

c. Received cash from fees earned for managing rental property, $6,000.

d. Paid rent on office and equipment for the month, $2,700.

e. Paid creditors on account, $1,000.

f. Billed customers for fees earned for managing rental property, $5,000.

g. Paid automobile expenses (including rental charges) for month, $600, and miscellaneous expenses, $300.

h. Paid office salaries, $1,900.

i. Determined that the cost of supplies on hand was $1,300; therefore, the cost of supplies used was $900.

j. Withdrew cash for personal use, $1,800.

Instructions

1. Indicate the effect of each transaction and the balances after each transaction, using

the following tabular headings:

2. Briefly explain why the owner’s investment and revenues increased owner’s equity, while withdrawals and expenses decreased owner’s equity.

3. Determine the net income for September.

4. How much did September’s transactions increase or decrease Maria Edsall’s capital?