Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 21

Transactions
On April 1 of the current year, Andrea Byrd established a business to manage rental property. She completed the following transactions during April:
a. Opened a business bank account with a deposit of $45,000 from personal funds.
b. Purchased office supplies on account, $2,000.
c. Received cash from fees earned for managing rental property, $8,500.
d. Paid rent on office and equipment for the month, $5,000.
e. Paid creditors on account, $1,375.
f. Billed customers for fees earned for managing rental property, $11,250.
g. Paid automobile expenses (including rental charges) for month, $840, and miscellaneous expenses, $900.
h. Paid office salaries, $3,600.
i. Determined that the cost of supplies on hand was $550; therefore, the cost of supplies used was $1,450.
j. Withdrew cash for personal use, $2,000.
Instructions
1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:

2. Briefly explain why the owner's investment and revenues increased owner's equity, while withdrawls and expenses decreased owner's equity.
3. Determine the net income for April.
4. How much did April's transactions increase or decrease Andrea Byrd's capital