Ana Urbin established an insurance agency on March 1 of the current year and completed the following transactions during March:

a. Opened a business bank account with a deposit of $40,000 from personal funds.

b. Purchased supplies on account, $1,500.

c. Paid creditors on account, $800.

d. Received cash from fees earned on insurance commissions, $7,250.

e. Paid rent on office and equipment for the month, $2,500.

f. Paid automobile expenses for month, $1,000, and miscellaneous expenses, $400.

g. Paid office salaries, $2,000.

h. Determined that the cost of supplies on hand was $400; therefore, the cost of supplies used was $1,100.

i. Billed insurance companies for sales commissions earned, $9,350.

j. Withdrew cash for personal use, $3,000.

Instructions

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

2. Briefly explain why the owner's investment and revenues increased owner's equity, while withdrawals and expenses decreased owner'sequity.

Transcribed Image Text:

Assets -Liabilities+ Owner's Equity Ana Ana Fees Rent Salaries Supplies Auto gEaned Expense Expense Expense Accounts Accounts bi,Ubn,F Misc Cash + Receivable Supplies Payable+ ble Supplies PayableCapital Drawin