Overview
On August 1, 20Y9, 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. |
| Required: |
| 1. | Indicate the effect of each transaction and the balances after each transaction, using the following tabular headings: |
| Assets | = | Liabilities | + | Stockholders’ Equity |
| | | | Accounts | | Common | | | | Sales | | Salaries | | Rent | | Auto | | Supplies | | Miscellaneous |
| Cash | + | Supplies | = | Payable | + | Stock | - | Dividends | + | Commissions | - | Expense | - | Expense | - | Expense | - | Expense | - | Expense |
| 2. a. Prepare an income statement for August. |
| 2. b. Prepare a statement of stockholders’ equity for August. |
| 2. c. Prepare a balance sheet as of August 31. |