PR 1-4A Transactions; financial statements

On January 1, 2012, Carlton Myers established Vista Realty. Carlton completed the following transactions during the month of January:

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

b. Purchased supplies (pens, file folders, paper, etc.) on account, $2,500.

c. Paid creditor on account, $1,600.

d. Earned sales commissions, receiving cash, $25,500.

e. Paid rent on office and equipment for the month, $5,000.

f. Withdrew cash for personal use, $8,000.

g. Paid automobile expenses (including rental charge) for month, $2,500, and miscellaneous expenses, $1,200.

h. Paid office salaries, $3,000.

i. Determined that the cost of supplies on hand was $850; therefore, the cost of supplies used was $1,650.

Instructions

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

Assets		= Liabilities +				Owner’s Equity
Â	Â	Â	Carlton	Carlton	Â	Office	Â	Â	Â
Â	Â	Accounts	Myers	Myers,	Sales	Rent	Salaries	Auto	Supplies	Â
Cash	+ Supplies	Payable	+ Capital	Drawing	+ Commissions	- Expense	- Expense	- Expense	- Expense	- Expense

2. Prepare an income statement for January, a statement of owner’s equity for January, and a balance sheet as of January 31.