On August 1, 2010, Tanja Zier established Royal Realty. Tanja completed the following transactions during the month of August:

a. Opened a business bank account with a deposit of $20,000 from personal funds.

b. Purchased supplies (pens, file folders, paper, etc.) on account, $2,650.

c. Paid creditor on account, $1,600.

d. Earned sales commissions, receiving cash, $28,750.

e. Paid rent on office and equipment for the month, $4,200.

f. Withdrew cash for personal use, $5,000.

g. Paid automobile expenses (including rental charge) for month, $2,500, and miscellaneous expenses, $1,200.

h. Paid office salaries, $10,000.

i. Determined that the cost of supplies on hand was $1,000; therefore, the cost of supplies used was $1,650.

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 August, a statement of owner's equity for August, and a balance sheet as of August 31.

Transcribed Image Text:

Owner's Equity Assets = Liabilities+ Office Salaries Accounts Sales Misc. Expense Tanja Zier, Tanja Zier, Rent Expense Auto Supplies + Supplies = Payable + Capital Drawing + Commissions + Expense Expense - Expense Cash