Corporate Financial Accounting 14th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 56

Transactions; financial statements
On August 1, 2018, Brooke Kline established Western Realty. Brooke completed the following transactions during the month of August:
A. Opened a business 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 sales 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 expenses 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.
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 August, a retained earnings statement for August, and a balance sheet as of August 31.