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Cody Macedo established an insurance agency on January 1 of the current year and completed the following transactions during January: |
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| (a) | Opened a business bank account with a deposit of $75,000 in exchange for capital stock. | ||||||||
| (b) | Purchased supplies on account, $3,000. | ||||||||
| (c) | Paid creditors for account, $1,000. | ||||||||
| (d) | Received cash from fees earned on insurance commissions, $11,800. | ||||||||
| (e) | Paid rent on office and equipment for the month, $4,000. | ||||||||
| (f) | Paid automobile expenses for month, $600, and miscellaneous expenses, $200. | ||||||||
| (g) | Paid office salaries, $2,500. | ||||||||
| (h) | Determined that the cost of supplies on hand was $1,900; therefore, the cost of supplies used during the month was $1,100. | ||||||||
| (i) | Billed insurance companies for sales commissions earned, $12,500. | ||||||||
| (j) | Paid dividends, $5,000. | ||||||||
| To Do: | |||||||||
| 1 | In tabular form, indicate the effect each transaction has on the accounts. Calculate the balance of each account after all the transactions have been entered. | ||||||||
| 2 | Using the account balances at the end of the month, prove the accounting equation is in balance. | ||||||||