Chapter 1, Problem 4PB

Transactions; financial statements

2. Net income: $10,850

On April 1, 20Y8, Maria Adams established Custom Realty. Maria completed the following transactions during the month of April:

a. Opened a business bank account with a deposit of $24,000 in exchange for common stock.

b. Paid rent on office and equipment for the month, $3,600.

c. Paid automobile expenses for month, $1,350, and miscellaneous expenses, $600.

d. Purchased supplies on account, $1,200.

e. Earned sales commissions, receiving cash, $19,800.

f. Paid creditor on account, $750.

g. Paid office salaries, $2,500.

h. Paid dividends, $3,500.

i. Determined that the cost of supplies on hand was $300; therefore, the cost of supplies used was $900.

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 April, a statement of stockholders’ equity for April, and a balance sheet as of April 30.