Apr. 27 Discovered an error in computing a commission; received cash from the salesperson for the overpayment, $2,500. 28 Paid automobile expense (including rental charges for an automobile), $1,500. 29 Paid miscellaneous expenses, $1,400. 30 Recorded revenue earned and billed to clients during the month, $57,000. 30 Paid salaries and commissions for the month, $11,900. 30 Paid dividends, $4,000. 30 Rented land purchased on April 15 to local merchants association for use as a parking lot in May and June, during a street rebuilding program; received advance payment of $10,000.
Apr. 27 Discovered an error in computing a commission; received cash from the salesperson for the overpayment, $2,500. 28 Paid automobile expense (including rental charges for an automobile), $1,500. 29 Paid miscellaneous expenses, $1,400. 30 Recorded revenue earned and billed to clients during the month, $57,000. 30 Paid salaries and commissions for the month, $11,900. 30 Paid dividends, $4,000. 30 Rented land purchased on April 15 to local merchants association for use as a parking lot in May and June, during a street rebuilding program; received advance payment of $10,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Journal Entry and Accounting Equation Analysis**
**Date:** Apr. 1
**Description:**
1. **Rent Expense**
- **Post. Ref.:** 52
- **Debit:** $6,500.00
2. **Cash**
- **Post. Ref.:** 11
- **Credit:** $6,500.00
**Accounting Equation Impact:**
- **Assets:** Decrease (indicated by a downward arrow)
- **Liabilities:** No change
- **Equity:** Decrease (indicated by a downward arrow)
**Explanation:**
This table illustrates a journal entry dated April 1st, documenting a rent expense transaction. The entry involves debiting the Rent Expense account for $6,500 and crediting the Cash account for the same amount.
**Entry Details:**
- The **Rent Expense** account is increased by debiting $6,500. This reflects an increase in expenses.
- The **Cash** account is decreased by crediting $6,500, showing a reduction in cash assets.
**Accounting Equation:**
- **Assets** decrease due to the cash outflow.
- **Equity** decreases as expenses reduce net income, which in turn reduces retained earnings under equity.
- **Liabilities** are unaffected by this transaction.
Through this transaction, the accounting equation (Assets = Liabilities + Equity) remains balanced. Expenses lead to a decrease in equity, while the decrease in cash reduces assets.
Transcribed Image Text:**April Financial Transactions Overview**
- **April 27**
- Corrected an error in commission computation and received $2,500 in cash as reimbursement from the salesperson for an overpayment.
- **April 28**
- Paid $1,500 for automobile expenses, including rental charges.
- **April 29**
- Incurred miscellaneous expenses amounting to $1,400.
- **April 30**
- Recorded revenues earned and billed to clients for the month, totaling $57,000.
- Paid out salaries and commissions for the month, amounting to $11,900.
- Distributed dividends totaling $4,000.
- Rented land purchased on April 15 to a local merchants association for use as a parking lot in May and June, receiving an advance payment of $10,000 during a street rebuilding program.
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