On November 1 of the current year, Rhea Quade established a business to manage rental property. She completed the following transactions during November:

a. Opened a business bank account with a deposit of $30,000 from personal funds.

b. Purchased supplies (pens, file folders, and copy paper) on account, $1,750.

c. Received cash from fees earned for managing rental property, $3,600.

d. Paid rent on office and equipment for the month, $1,300.

e. Paid creditors on account, $500.

f. Billed customers for fees earned for managing rental property, $4,800.

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

h. Paid office salaries, $1,000.

i. Determined that the cost of supplies on hand was $800; therefore, the cost of supplies used was $950.

j. Withdrew cash for personal use, $2,000.

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's equity.

Transcribed Image Text:

Owner's Equity = Liabilities + Assets Rhea Quade, Cash + Receivable + Supplies = Payable + Capital Rhea Quade, Drawing + Salaries Expense Supplies Rent Expense Accounts Accounts Auto Expense Misc. Expense Fees Earned Expense