Question

On April 1, 20Y8, 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 $25,000 in exchange for common stock.
b. Purchased supplies on account, $2,520.
c. Paid creditor on account, $1,590.
d. Earned sales commissions, receiving cash, $25,700.
e. Paid rent on office and equipment for the month, $5,040.
f. Paid dividends, $8,000.
g. Paid automobile expenses for month, $2,420, and miscellaneous expenses, $1,160.
h. Paid office salaries, $3,030.
i. Determined that the cost of supplies on hand was $850; therefore, the cost of supplies used was $1,670.

Required:
Indicate the effect of each transaction and the balances after each transaction.

Answer 1

Cash + Supplies = Accounts Payable + common stock - dividends + sales commission - Rent expense.

$20,000 + 2,520 = $2,520 - $1,590 + 25,700 - $5,040 - $8,000 - $2,420 - $1,160 - $3,030 - $850

Step-by-step explanation:

The effect of transaction is listed above. The effect will be on the balance sheet. These transaction have impacts on various accounts assets side is impacted and liability side is impacted. Equity is affected when there is payment of dividends and stock capital issuance.