PROBLEM #1 (30 points)

Maria Martinez decides to open a cleaning and laundry service near the local college campus that will operate as a sole proprietorship. Analyze the following transactions for the month of June in terms of their effect on the basic accounting equation. Record each transaction by increasing (+) or decreasing () the dollar amount of each item affected. Show the impact on revenue and expense transaction on owners equity.

Transactions

(1) Maria Martinez invests $25,000 in cash to start a cleaning and laundry business on June 1.

(2) Purchased equipment for $5,000 paying $3,500 in cash and the remainder due in 30 days.

(3) Purchased supplies for $1,200 cash.

(4) Received a bill from College Clarion for $200 for advertising in the campus newspaper.

(5) Cash receipts from customers for cleaning and laundry amounted to $2,600.

(6) Paid salaries of $600 to student workers.

(7) Billed the Tiger Tennis Team $480 for cleaning and laundry services.

(8) Paid $200 to College Clarion for advertising that was previously billed in Transaction 4.

(9) Maria Martinez withdrew $1,300 from the business for living expenses.

(10) Incurred utility expenses for month on account, $500.