On June 1 of the current year, Chad Wilson established a business to manage rental property. He completed the following transactions during June: a. Opened a business bank account with a deposit of $30,000 from personal funds.
b. Purchased office supplies on account, $1,800.
c. Received cash from fees earned for managing rental property, $10,000.
d. Paid rent on office and equipment for the month, $4,500.
e. Paid creditors on account, $1,250.
f. Billed customers for fees earned for managing rental property, $16,800.
g. Paid automobile expenses (including rental charges) for the month, $750, and miscellaneous expenses, $980.
h. Paid office salaries, $4,000.
i. Determined that the cost of supplies on hand was $680; therefore, the cost of supplies used was $1,120.
j. Withdrew cash for personal use, $7,500.

Required:
Indicate the effect of each transaction and the balances after each transaction.

a.

Assets = Increase $30,000

Liability = No effect

Equity = Increase $30,000

Balances : Cash = $30,000 , Capital = $30,000

b.

Assets = Increase $1,800

Liability = Increase $1,800

Equity = No effect

Balances : Office Supplies $1,800, Trade Payables $1,800

c.

Assets = Increase $10,000

Liability = No effect

Equity = Increase $10,000

Balances : Cash = $40,000, Revenue Earned $10,000

d.

Assets = Decrease $4,500

Liability = No effect

Equity = Decrease $4,500

Balances : Rent Expense $4,500, Cash $35,000

e.

Assets = Decrease $1,250

Liability = Decrease $1,250

Equity = No effect

Balances : Trade Payables $550, Cash $33,750

f.

Assets = Increase $16,800

Liability = No effect

Equity = Increase $16,800

Balances : Revenue Earned $26,800 , Trade Receivables $16,800

g.

Assets = Decrease $1,730

Liability = No effect

Equity = Decrease $1,730

Balances : Automobile expenses $750 , Miscellaneous expenses $980, cash $33,000

h.

Assets = Decrease $4,000

Liability = No effect

Equity = Decrease $4,000

Balances : Office salaries $4,000, cash $29,000

i.

Assets = Decrease $1,120

Liability = No effect

Equity = Decrease $1,120

Balances : Office Supplies $680, Supplies expenses $1,120

j.

Assets = Decrease $7,500

Liability = No effect

Equity = Decrease $7,500

Balances : Cash $21,500, Drawings $7,500

Explanation:

When required to give the effect of transactions, always remember the Accounting Equation : Assets = Equity + Liability

Transactions will affect one or more elements of the this equation. Here is a simple approach to arrive at the effects :

Step 1  : The initial step is to identify the Accounts affected.

Step 2 : Classify the Accounts as either Assets, Liabilities or Equity (Capital and Profit)

Step 3 : Give the Effect (Increase, Decrease or No Effect) on the Elements of the equation.

muslims control the north africa during the period of 1500 up

to 1800. they made a barrier to prevent further european exploration from

entering the africa from the north. however, the dutch ware still able to move

toward the interior with having south africa as one of the routes leading to

the east for trading with asia.