Question

Novak Company had the following two transactions related to its delivery truck. 1. Paid $150 for an oil change. 2. Paid $700 to install a special gear unit, which increases the operating efficiency of the truck.Prepare Novak's journal entries to record these two transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No Account Titles and Explanation Debit Credit 1. 2.

Answer 1

Answer and Explanation:

The Journal entries are shown below:-

1. Maintenance and Repairs Expense Dr, $150

             To Cash $150

(Being cash paid is recorded)

For recording this we debited the maintenance and Repairs Expense as there is increased in expenses and credited the cash as assets are decreased

2) Equipment $700

        To Cash $700

(Being cash paid is recorded)

For recording this we debited the equipment as it increased the assets and credited the cash as assets are decreased