The chart of accounts of the Barnes School is shown here, followed by the transactions that took place during October of this year.

Required

Record these transactions in the general journal, including a brief explanation for each entry. If you are using working papers, number the journal pages 31 and 32.

Prepare journal entries for the given transactions.

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

• ■ Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
• ■ Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Prepare journal entries for the given transactions.

Transaction on October 1:

Table (1)

Description:

• ■ Prepaid Insurance is an asset account. Since insurance is paid in advance, it is recorded as asset until it is consumed. So, asset value is increased, and an increase in asset is debited.
• ■ Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

Transaction on October 3:

Table (2)

Description:

• ■ Advertising Expense is an expense account. An increase in expense reduces the equity value, and a decrease in equity is debited.
• ■ Accounts Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on October 4:

Table (3)

Description:

• ■ Rent Expense is an expense account. An increase in expense reduces the equity value, and a decrease in equity is debited.
• ■ Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

Transaction on October 7:

Table (4)

Description:

• ■ Repairs Expense is an expense account. An increase in expense reduces the equity value, and a decrease in equity is debited.
• ■ Accounts Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on October 10:

Table (5)

Description:

• ■ Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
• ■ Tuition Income is a revenue account. Since gains and revenues increase equity, and an increase in equity is credited, Tuition Income account is credited.

Transaction on October 11:

Table (6)

Description:

• ■ Telephone Expense is an expense account. An increase in expense reduces the equity value, and a decrease in equity is debited.
• ■ Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

Transaction on October 15:

Table (7)

Description:

• ■ Furniture is an asset account. Since furniture is bought, asset account increased, and an increase in asset is debited.
• ■ Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.
• ■ Accounts Payable is a liability account. Since the payable increased, the liability increased, and an increase in liability is credited.

Transaction on October 18:

Table (8)

Description:

• ■ Accounts Payable is a liability account. Since the payable decreased, the liability decreased, and a decrease in liability is debited.
• ■ Cash is an asset account. Since cash is paid, asset account decreased, and a decrease in asset is credited.

Transaction on October 21: