5 5 Chapter 1 Introduction to Accounting and Business 39 PR 1-5B Transactions; financial statements 2. Net income: $10,000 On June 1, 2015, Lindsey Brown established Equity Realty. Lindsey completed the following transactions during the month of June: a. Opened a business bank account with a deposit of $15,000 from personal funds. b. Paid rent on office and equipment for the month, $4,000. c. Paid automobile expenses for the month, $1,200, and miscellaneous expenses, $800. d. Purchased supplies on account, $1,000. e. Earned sales commissions, receiving cash, $18,500. f. Paid creditor on account, $600. g. Paid office salaries, $2,500. h. Withdrew cash for personal use, $5,000. Instructions 1. Indicate the effect of each transaction using the following tabular headings: Assets = Liabilities + Owner's Equity Cash +Supplies = Lindsey Accounts Brown, Payable Capital Lindsey Brown, Withdrawals + Commissions Sales PR 1-6B Transactions; financial statements 3. Net income: $25,000 Office Rent Salaries Auto Misc. Expense - Expense - Expense - Expense 2. Prepare an income statement for June, a statement of owner's equity for June, and a balance sheet as at June 30, 2015. Swan Dry Cleaners is owned and operated by Peyton Keyes. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by another company at wholesale rates. The assets and the liabilities of the business on July 1, 2015, are as follows: Cash, $17,000; Accounts Receivable, $31,000; Supplies, $3,200; Land, $36,000; Accounts Payable, $10,400. Business transac- tions during July are summarized as follows: a. Peyton Keyes invested additional cash in the business with a deposit of $25,000 in the business bank account. b. Paid $24,000 for the purchase of land as a future building site. c. Received cash from cash customers for dry cleaning revenue, $19,500. d. Paid rent for the month, $3,000. e. Purchased supplies on account, $1,550. f. Paid creditors on account, $5,100. g. Charged customers for dry cleaning revenue on account, $24,750. h. Received monthly invoice for dry cleaning expense for July (to be paid in August), $8,200. i. Paid the following: wages expense, $5,100; truck expense, $1,200; utilities expense, $800; miscellaneous expense, $950. j. Received cash from customers on account, $26,750. k. Withdrew $18,000 cash for personal use. Instructions 1. Determine the amount of Peyton Keyes's capital as at July 1 of the current year. 2. State the assets, liabilities, and owner's equity as at July 1 in equation form. In tabular form below the equation, indicate increases and decreases resulting from each transaction. 3. Prepare an income statement for July, a statement of owner's equity for July, and a balance sheet as at July 31, 2015. NEL Copyright 2014 Nelson Education Ltd. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Nelson Education reserves the right to remove additional content at any time if subsequent rights restrictions require it.