On September 1 of the current year, Linda Cross established a business to manage rental property. She completed the following transactions during September:
a. Opened a business bank account with a deposit of $40,000 from personal funds.
b. Purchased supplies on account, $2,200.
c. Received cash from fees earned for managing rental property, $6,000.
d. Paid rent on office and equipment for the month, $2,700.
e. Paid creditors on account, $1,000.
f. Billed customers for fees earned for managing rental property, $5,000.
g. Paid automobile expenses for the month, $600, and miscellaneous expenses, $300.
h. Paid office salaries, $1,900.
i. Withdrew cash for personal use, $1,800.
Instructions
1. Indicate the effect of 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.
3. Determine the net income for September.
4. How much did September€™s transactions increase or decrease Linda Cross€™ capital?

Transcribed Image Text:

Assets = Liabilities + Owner's Equity Linda Accounts Accounts Cross, Lnda Cross, Fees Rent Salaries Auto Misc Cash + Receivable + Supplies = Payable + Capital -withdrawals + Earned-Expense-Expense-Expense-Expense