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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

GENERAL JOURNAL ENTRIES For each of the following transactions, list the account to be debited and the account to be credited in the general journal.

1. Invested cash in the business, $5,000.

2. Paid office rent, $500.

3. Purchased office supplies on account, $300.

4. Received cash for services rendered (fees), $400.

5. Paid cash on account, $50.

6. Rendered services on account, $300.

7. Received cash for an amount owed by a customer, $100.

To determine

Indicate the account that must be debited and credited for the given transaction.

Explanation

Journal:

Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

Ø  Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.

Ø  Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, and expenses.

Indicate the account that must be debited and credited for the given transaction.

TransactionDebitCredit
1. Invested cash in the business, $5,000.CashOwner’s capital
2. Paid office rent $500.Rent expenseCash
3. Purchased office supplies on account, $300.Office suppliesAccounts payable
4. Received cash for services rendered (fees), $400.CashFees
5. Paid cash on account, $50.Accounts payableCash
6. Rendered services on account, $300Accounts receivableFees
7. Received cash for an amount owed by a customer, $100.CashAccounts receivable

(Table 1)

  • Investing in a business increases the capital and cash of the company, therefore cash is debited by $5,000 and owner’s capital is credited by $5000.
  • When office rent is paid by cash there is a decrease the value of the cash and rent expense...

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