Reference no: EM13542728

Jean Howard established an insurance agency on july 1 of thecurrent year and completed the following transactions duringjuly:

a. Opened a business bank account with a deposit of $50,000from personal funds.

b. Purchased supplies on account, $1,600.

c. Paid creditors on account, $500.

d. Received cash from fees earned on insurance commissions,$9,250.

e. Paid rent on office and equipment for the month,$2,500.

f. Paid automobile expenses for month, $900, and miscellaneousexpenses, $300.

g. Paid office salaries, $1,900.

h. Determined that the cost of supplies on hand was $550;therefore, the cost of supplies used was $1,050.

i. Billed insurance companies for sales commissions earned,$11,150.

j. Withdrew cash for personal use, $2,700. Instructions

1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: Assets = Liabilities+ Owner's Equity Cash + Accounts Receivable + Supplies = Accounts Payable +Jean Howard, Capital - Jean Howard, Drawing + Fees Earned - RentExpense - Salaries Expense - Supplies Expense - Auto Expense -Miscellaneous Expense

2. Briefly explain why the owners investment and revenues increased owner's equity, while withdrawals and expenses decreasedowner's equity.