Selected transactions for D. Reyes, an interior decorator, in her first month of

Question

Selected transactions for D. Reyes, an interior decorator, in her first month of business, are as follows: Jan 2 - Invested $10,000 cash in business. Jan 3 - Purchased used car for $4,000 cash for use in business. Jan 9 - Purchased supplies on account for $500. Jan 11 - Billed customers $1,800 for services performed. Jan `16 - Paid $200 cash for advertising. Jan 20 - Received $700 cash from customers billed on Jan. 11. Jan 23 - Paid creditor $300 cash on balance owed. Jan 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's equity). (b) The specific account debited and credited (cash, rent expense, service revenue, etc.). (c) Whether the specific account is increased or decreased. (d) The normal balance of the specific account.

Explanation / Answer

Jan 2 - Invested $10,000 cash in business. Normal balances: Cash = $10000 , equity = $10000 Asset(Cash) debited so Increases and Owners Equity (Liability) credited hence Increases Jan 3 - Purchased used car for $4,000 cash for use in business. Normal balances : Cash = 10000 - 4000 =$6000 and car = $4000 Asset(Car) debited hence increases and Cash(Asset) credited hence decreases Jan 9 - Purchased supplies on account for $500. Normal balances:Supplies = $500 , A/c Payables = $500 Purchases(expenses) Increase hence debited and Liability(A/c Payable) increase hence crdited Jan 11 - Billed customers $1,800 for services performed. Normal balances : Sales = 1800 and Receivable = 1800 Receivables(asset) Increases hence debit and Sales(revenue) increases hence credit Jan `16 - Paid $200 cash for advertising. Normal balances : Cash = 6000 - 200 = 5800 and advertising expense = 200 Advertising (expense) debit hence increases and Cash(Asset) credit hence decreases Jan 20 - Received $700 cash from customers billed on Jan. 11. Normal balances: cash = 5800 + 700 = 6500 and Receivables = 1800 - 700 = 1100 Asset(cash) debit hence increases and Receivables(asset) credited hence decreases. Jan 23 - Paid creditor $300 cash on balance owed. Normal Balances: cash = 6500 - 300 = 6200 and A/c Payables = $500 - $300 = $200 Asset(cash) credited hence decreases and Liability (A/c Payables) debited hence decreases Jan 28 - Withdrew $1,000 cash for personal use by owner. Normal balances: Owners equity = 10000 - 1000 = 9000 and cash = 6200 - 1000 = 5200 Asset(cash) decreases hence credit and Liability(owners equity) decreases hence credit

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.