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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

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

images

images

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.

To determine

Prepare journal entries for the given transactions.

Explanation

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:

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
October1Prepaid Insurance 1,850 
     Cash  1,850
  (Record payment of insurance in advance)   

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:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
October3Advertising Expense 415 
   Accounts Payable  415
  (Record receipt of advertising expense bill)   

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:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
October4Rent Expense 1,870 
   Cash  1,870
  (Record payment of rent expense)   

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:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
October7Repairs Expense 318 
   Accounts Payable  318
  (Record receipt of repairs expense bill)   

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:

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
October10Cash 6,375 
   Tuition Income  6,375
  (Record revenue earned and received)   

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:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
October11Telephone Expense 312 
   Cash  312
  (Record payment of telephone expense)   

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:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
October15Furniture 1,980 
   Cash  980
   Accounts Payable  1,000
  (Record purchase of equipment)   

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:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
October18Accounts Payable 415 
   Cash  415
  (Record cash paid on account)   

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:

DateAccount Titles and ExplanationsPost...

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