Principles of Accounting 1

Chapter 1 Problem 1 Homework

On April 1 of the current year, Bret Michaels established a business to manage recording artists. He completed the following transactions during March:

a. Opened a business bank account with a deposit of $40,000 in exchange for capital stock.

b. Paid rent expense for the month, $1,900.

c. Purchased office supplies using cash, $4,000.

d. Received cash from sales commissions earned for managing recording artists, $8,000.

e. Purchased office equipment on account, $5,000.

f. Billed customers for sales commission earned, $15,500.

g. Paid office salaries, $7,200.

h. Determined that the cost of supplies on hand was $1,600; therefore, the cost of supplies used was $2,400.

i. Paid creditors on account, $4,000.

j. Received $10,000 cash from customers on account.

k. Paid dividends, $1,700.

Instructions

1. Create an excel spreadsheet as demonstrated in the example problem. Be sure to use the appropriate account titles and place them in the proper order.

Hint: (Assets-Cash, Accounts Receivable, Supplies, Office Equipment; Liabilities-Accounts Payable; Stockholders Equity-Capital Stock, Dividends, Sales Commissions or Fees Earned, Rent Expense, Salaries Expense, Supplies Expense)

2. Calculate the amount of net income for March.

3. Calculate the net change in Retained Earnings for the month of April.