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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

Decor Services completed the following transactions. Journalize the transactions in general journal form, including brief explanations.

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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 7:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
October7Cash 970 
   Accounts Receivable  970
  (Record cash received on account from RH, Invoice Number: 312)   

Table (1)

Description:

  • ■ Cash is an asset account. Since cash is received, asset account increased, and an increase in asset is debited.
  • ■ Accounts Receivable is an asset account. Since amount to be received has decreased, asset account decreased, and a decrease in asset is credited.

Transaction on October 15:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
October15Accounts Payable 725 
   Cash  725
  (Record cash paid on account to M Ideas, Check Numbered: 2242)   

Table (2)

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 20:

DateAccount Titles and ExplanationsPost. Ref.Debit ($)Credit ($)
October20BB, Drawing 1,200 
   Cash  1,200
  (Record cash withdrawn by BB for personal use)   

Table (3)

Description:

  • ■ BB, Drawing is a contra-capital account...

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