Cody Macedo established the insurance agency on January 1 of the present year and completed the given transactions all through January:
a) Opened a business bank account with a deposit of $75,000 in exchange for the capital stock.
b) Purchased supplies on the account, $3,000.
c) Paid creditors for account, $1,000.
d) Received cash from fees earned on the insurance commissions, $11,800.
e) Paid rent on office and equipment for the month, $4,000.
f) Paid automobile expenditures for month, $600 and miscellaneous expenditures, $200.
g) Paid office salaries, $2,500.
h) Determined that the cost of supplies on hand was $1,900; thus, the cost of supplies used throughout the month was $1,100.
i) Billed insurance companies for the sales commissions earned, $12,500.
j) Paid dividends, $5,000.
1. In a tabular form, point out the effect each transaction has on the accounts. Compute the balance of each account after all the transactions have been entered.
2. By using the account balances at the end of month, prove that the accounting equation is in balance.