E2-2 Selected transactions for M. Anderson, an interior decorator, in her fi rst
ID: 2353458 • Letter: E
Question
E2-2 Selected transactions for M. Anderson, an interior decorator, in her fi rst month of business,
are as follows.
Jan. 2 Invested $10,000 cash in business.
3 Purchased used car for $4,000 cash for use in business.
9 Purchased supplies on account for $500.
11 Billed customers $2,100 for services performed.
16 Paid $350 cash for advertising.
20 Received $700 cash from customers billed on January 11.
23 Paid creditor $300 cash on balance owed.
28 Withdrew $1,000 cash for personal use by owner.
Instructions
For each transaction, indicate the following.
(a) The basic type of account debited and credited (asset, liability, owner
Explanation / Answer
Abbreviations for the following: Dr = Debit, Cr = Credit; I = Increased; D = Decreased; NB = Normal balance; A = Asset; L = Liabilitiy; SE = stockholders’ equity) Here are the journal entries: Jan. 2 Invested $10,000 cash in the business in exchange for common stock Dr Cash (A, I, NB is Dr) Cr Common stock (SE, I, NB is Cr) 3 Purchased used car for $4,000 cash for use in business Dr Motor vehicle (A, I, NB is Dr) Cr Cash (A, D, NB is Dr) 9 Purchased supplies on account for $500 Dr Supplies (A, I, NB is Dr) Cr Accounts payable (L, I, NB is Cr) 11 Billed customers $1,800 for services performed Dr Accounts receivable (A, I, NB is Dr) Cr Services revenue (SE, I, NB is Cr) 16 Paid $200 cash for advertising Dr Advertising expense (SE, D, NB is Cr) Cr Cash (A, D, NB is Dr) 20 Received $700 cash from customers billed on January 11 Dr Cash (A, I, NB is Dr) Cr AR (A, D, NB is Dr) 23 Paid creditor $300 cash on balance owed Dr AP (L, D, NB is Cr) Cr Cash (A, D, NB is Dr) 28 Declared and paid a $1,000 cash dividend Dr Dividend (SE, D, NB is Dr) Cr Cash (A, D, NB is Dr)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.