Jean Howard established an insurance agency on July 1 of the current year and completed the following transactions during July:a. Opened a business bank account with a deposit of $50,000 from personal funds.b. Purchased supplies on account, $1,600.c. Paid creditors on account, $500.d. Received cash from fees earned on insurance commissions, $9,250.e. Paid rent on office and equipment for the month, $2,500.f. Paid automobile expenses for month, $900, and miscellaneous expenses, $300.g. Paid office salaries, $1,900.h. Determined that the cost of supplies on hand was $550; therefore, the cost of supplies used was $1,050.i. Billed insurance companies for sales commissions earned, $11,150.j. Withdrew cash for personal use, $2,700.Instructions1. 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.
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Jean Howard established an insurance agency on July 1 of