Reference no: EM13553301

On June 1 of the current year, Doni Gilmore established a business to manage rental property. She completed the following transactions during June:

a. Opened a business bank account with a deposit of $25,000 from personal funds.

b. Purchased supplies (pens, file folders, and copy paper) on account, $1,150.

c. Received cash from fees earned for managing rental property, $4,500.

d. Paid rent on office and equipment for the month, $1,500.

e. Paid creditors on account, $600.

f. Billed customers for fees earned for managing rental property, $2,250.

g. Paid automobile expenses (including rental charges) for month, $400, and miscellaneous expenses, $180.

h. Paid office salaries, $1,200.

i. Determined that the cost of supplies on hand was $380; therefore, the cost of supplies used was $770.

j. Withdrew cash for personal use, $1,000.

Instructions

1. Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings:

	Assets			= Liabilities +			Owner's Equity
				Doni	Doni
	Accounts		Accounts	Gilmore,	Gilmore,	Fees	Rent	Salaries	Supplies	Auto	Misc.
Cash+	Receivable+	Supplies=	Payable+	Capital-	Drawing+	Earned-	Expense-	Expense-	Expense-	Expense-	Expense-

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