On August 1, 20Y9, Brooke Kline established Western Realty. Brooke completed the following transactions during the month of August: a. Opened a bank account with a deposit of $35,000 in exchange for common stock.b. Purchased supplies on account, $2,750.c. Paid creditor on account, $1,800.d. Earned commissions, receiving cash, $52,800.e. Paid rent on office and equipment for the month, $4,500.f. Paid dividends, $3,000.g. Paid automobile for month, $1,100, and miscellaneous expenses, $1,200.h. Paid office salaries, $5,250.i. Determined that the cost of supplies on hand was $1,750; therefore, the cost of supplies used was $1,000.Required: Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:Assets = Liabilities + Stockholders EquityAccounts Common Sales Salaries Rent Auto Supplies MiscellaneousCash + Supplies = Payable + Stock – Dividends + Commissions – Expense – Expense – Expense – Expense – Expense a. Prepare an for August. b. Prepare a statement of stockholders equity for August. c. Prepare a as of August 31. Share on Facebook Tweet Follow us Sample Answer Western Realty 1. Journal Entries and Balance Sheet | Date | Transaction | Asset | = | Liability | + | Stockholders Equity | |—|—|—|—|—|—|—|—|—|—|—|—|—|—|—|—|—|—|—|—| | Aug 1 | Opened bank account | Cash +35,000 | | | + | Common Stock +35,000 | | Aug 2 | Purchased supplies on account | Supplies +2,750 | | | | | Accounts Payable +2,750 | | Aug 3 | Paid creditor on account | Accounts Payable -1,800 | | | | | Cash -1,800 | | Aug 4 | Earned commissions | Cash +52,800 | | | | | Commissions +52,800 | | Aug 5 | Paid rent | Rent Expense -4,500 | | | | | Cash -4,500 | | Aug 6 | Paid dividends | Dividends -3,000 | | | | | Cash -3,000 | | Aug 7 | Paid automobile and miscellaneous expenses | Auto Expense -1,100 | | | | | Cash -1,100 | Full Answer Section | Aug 8 | Paid office salaries | Salaries Expense -5,250 | | | | | Cash -5,250 | | Aug 31 | Adjusted for supplies used | Supplies Expense -1,000 | Supplies -1,000 | | | | | 2. Financial Statements a. Income Statement for the Month Ended August 31, 20Y9 Commissions Revenue: $52,800 Expenses: Rent Expense: $4,500 Salaries Expense: $5,250 Auto Expense: $1,100 Supplies Expense: $1,000 Total Expenses: $11,850 Net Income: $40,950 b. Statement of Stockholders’ Equity for the Month Ended August 31, 20Y9 Common Stock, Beginning Balance: $35,000 Add: Net Income: $40,950 Less: Dividends: $3,000 Common Stock, Ending Balance: $72,950 c. Balance Sheet as of August 31, 20Y9 Assets: Cash: $37,100 Supplies: $1,750 Total Assets: $38,850 Liabilities: Accounts Payable: $950 Total Liabilities: $950 Stockholders’ Equity: Common Stock: $72,950 Retained Earnings: $40,950 Total Stockholders’ Equity: $113,900 Total Liabilities and Stockholders’ Equity: $113,900 This question has been answered. Get Answer
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