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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Identifying transactions

Wyoming Tours Co. is a travel agency. The nine transactions recorded by Wyoming Tours during June 2016, its first month of operations, are indicated in the following T accounts:

Chapter 2, Problem 2.13EX, Identifying transactions Wyoming Tours Co. is a travel agency. The nine transactions recorded by , example  1

Indicate for each debit and each credit: (a) whether an asset, liability, owner’s equity, drawing, revenue, or expense account was affected and (b) whether the account was increased(+) or decreased(−). Present your answers in the following form, with transaction (1) given as an example:

Chapter 2, Problem 2.13EX, Identifying transactions Wyoming Tours Co. is a travel agency. The nine transactions recorded by , example  2

To determine

(a) and (b):

T-account:

An account is referred to as a T-account, because the alignment of the components of the account resembles the capital letter ‘T’. An account consists of the three main components which are as follows:

  1. (a) The title of the account
  2. (b) The left or debit side
  3. (c) The right or credit side

Journal:

Journal is the book of original entry. Journal consists of the day today financial transactions in a chronological order. The journal has two aspects; they are debit aspect and the credit aspect.

To indicate: Whether for each debit, and credit account, it has affected asset, liability, owner’s equity, drawing, revenue or expense account, and whether the account has increased or decreased.

Explanation

Normal balance:

Normal balance refers to the excess of amount on one side, over the amount on the other side in an account. The excess amount of debit side over the credit side is shown as the normal debit balance. The excess amount of credit side over the debit side is shown as the normal credit balance.

Type of account Normal balance
Asset account Debit balance
Liability account Credit balance
Owner’s equity Credit balance
Drawing Debit balan...

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