On June 1 of the current year, Doni Gilmore established a business to manage rental property.

She completed the following transactions during June:

a. Opened a business bank account with a deposit of $25,000 from personal funds.

b. Purchased supplies (pens, file folders, and copy paper) on account, $1,150.

c. Received cash from fees earned for managing rental property, $4,500.

d. Paid rent on office and equipment for the month, $1,500.

e. Paid creditors on account, $600.

f. Billed customers for fees earned for managing rental property, $2,250.

g. Paid automobile expenses (including rental charges) for month, $400, and miscellaneous expenses, $180.

h. Paid office salaries, $1,200.

i. Determined that the cost of supplies on hand was $380; therefore, the cost of supplies used was $770.

j. Withdrew cash for personal use, $1,000.

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'sequity.

Transcribed Image Text:

Assets = Liabilities + Owner's Equity Doni Doni Accounts Accounts Gilmore, G n SupplesAuto polles Auto Msc cash + Receivable + Supplies-Payable + Capital-Drawing + Earned-Expense-Expense-Expense-Expense . Expense