You Have Been Hired as the Accountant for a Newly

question 93

Essay

You have been hired as the accountant for a newly formed real estate company called Porter Real Estate Limited. The following business transactions occurred during the month of September, 2013:
1. Shareholders invest $50,000 in cash for 10,000 common shares to start a real estate office.
2. Signed a lease for office space.
3. Paid $200 cash for office supplies
4. Purchased office equipment for $6,000, paying $2,500 in cash and signing a 30-day, note payable for the remainder.
5. Purchased $100 of office supplies on account.
6. Real estate commissions billed to clients amount to $5,400.
7. Paid $700 in cash for the current month's rent.
8. Paid $50 cash on account for office supplies purchased in transaction 5.
9. Received a bill for $500 for advertising for the current month.
10. Paid $2,500 cash for office salaries.
11. Paid $1,000 cash dividends to shareholders.
12. Received a cheque for $3,000 from a client in payment on account for commissions billed in transaction 6.
Record the transactions for September, 2013.

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Definitions:

Automatic Stabilizer

Economic policies and programs, such as unemployment insurance, that automatically adjust to counteract economic fluctuations without the need for explicit government intervention.

Automatic Stabilizers

Economic policies and programs, such as unemployment insurance and taxation, that automatically adjust with economic conditions to stabilize income and spending.

Recession

An interval of momentary economic contraction characterized by decreased commercial and industrial operations, commonly signaled by a reduction in Gross Domestic Product over two back-to-back quarters.

Government Budget Deficit

The financial situation that occurs when a government's expenditures exceed its revenues in a given fiscal year.