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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, $1,000.

2. Performed services on account, $200.

3. Purchased office equipment on account, $500.

4. Received cash on account for services previously rendered, $200.

5. Made a payment on account, $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 $1,000.CashOwner’s capital
2. Performed services on account, $200Accounts receivableFees
3. Purchased office equipment on account, $500.Office equipmentAccounts payable
4. Received cash on account for services previously rendered $200.CashAccounts receivable
5. Made payment on account, $100.Accounts payableCash

(Table 1)

  • Investing in a business increases the capital and cash of the company. As per the rules of debit and credit, when there is an increase in the asset account (cash) it must be debited and when there is an increase in the value of stockholder’s equity account (capital) it must be credited...

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