1. In accounting its important to understand that there may be events that occur
ID: 2343046 • Letter: 1
Question
1. In accounting its important to understand that there may be events that occur that are not business transactions. Please give us an example of a business transaction that affects the accounting equation. Remember that the expanded accounting equation is: Assets = Liabilities + Owner's Equity + Revenue - Expenses. Please be sure that you provide this transaction in General Journal format. Additionally give us an example of an event that is not an accounting transaction.
2. Please let us know what you are doing to get those rules of debit and credit memorized. Please let us know if you have any hints to help us with this process.
Explanation / Answer
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Increase in revenue or liability or equity = credit
Decrease in revenue or liability or equity = debit
Increase in expense or assets = debit
Decrease in expense or assets = credit
Analysis of transaction
No.
Transaction
Account title
Effect
Categories
DR/CR
Amount($)
1
Issued of common stock of $1000 at par value
Cash
Increase
Assets
Debit
1000
Common stock
Increase
Equity
Credit
1000
2
Purchase of supplies on account $200
Supplies
Increase
Assets
Debit
200
Account payable
Increase
Liability
Credit
200
3
Service performed of $400 on account
Account receivable
Increase
Assets
Debit
400
Sales revenue
Increase
Revenue
Credit
400
4
Wages expense paid $100
Wages expense
Increase
Expense
Debit
100
Cash
Decrese
Assets
Credit
100
5
Utilities expense paid $50
Utilities expense
Increase
Expense
Debit
50
Cash
Decrease
Assets
Credit
50
6
300$ received from service perfumed in transaction number 3
Cash
Increase
Assets
Debit
300
Account receivable
Decrease
Assets
Credit
300
7
Paid to 200$ for supplies purchased on transition number 2
Account payable
Decrease
Liability
Debit
200
Cash
Decrease
Assets
Credit
200
Date
General journal
Debit
Credit
1
Cash
1000
Common stock
1000
(To record cash received from issued of common stock.)
2
Supplies
200
Account payable
200
(To record purchase of supplies on account.)
3
Account receivable
400
Sales revenue
400
(To record service revenue on account.)
4
Wages expense
100
Cash
100
(To record wages expense paid.)
5
Utilities expense
50
Cash
50
(To record Utilities expense paid.)
6
Cash
300
Account receivable
300
(To record cash collected from account receivable.)
7
Account payable
200
Cash
200
(To record payment made to account payable.)
Non cash transactions
Company send price list to customer
Meeting with client
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