Answer:
All workings and explanations are in the explanation section.
Explanation:
<u>Transaction 1: </u>
<u>Purchased new equipment for $3,350 by issuing a check for $2,100 as a down payment with the balance due in 30 days.</u>
Debit: Fixed asset account - Equipment $3,350
Credit: Bank account $2,100
Credit: Current liabilities - $1,250
<u>Explanation:</u>
- Equipment is a fixed asset, when an asset is increased, it is debited.
- Partial payment was made by bank- bank is a current asset, a decrease to the asset is a credit item.
- The remaining balance is current liability, since payable within 30 days, an increase in liability is a credit item.
<u>Transaction 2:</u>
<u>Returned damaged supplies and received a $105 cash refund. </u>
Debit: Cash - $105
Credit: Supplies - $105
<u>Explanation:</u>
- Cash refund is an increase in cash - current assets, it is a debit item
- Supplies are decreased, and supplies is also a current asset, a decrease in current assets is a credit item.
Transaction 3:
Purchased supplies for $310 on account.
Debit - supplies - $310
Credit - payables - $310
<u>Explanation:</u>
- Supplies are current assets - an increase in supplies is a debit item.
- They are purchased on account means it is a current liability, therefore, an increase in liabilities is a credit item.
<u>Transaction 4:</u>
<u>Provided services for $7,350 on credit.</u>
Debit: Receivable - $7,350
Credit: Sales revenue - $7,350
<u>Explanation:</u>
- Receivables are current assets - an increase in receivables is a debit item.
- Sales revenue is credit item, an increase in revenue is credit.
<u>Transaction 5:</u>
<u>Issued a check for $920 to pay a creditor on account.</u>
Debit - payables - $920
Credit - Bank -$920
<u>Explanation:</u>
- A decrease in creditors is a debit item
- A decrease in bank, is a credit item
<u>Transaction 6:</u>
<u>Issued checks for $3,500 to pay the employees their monthly salaries.</u>
Debit Wages - $3,500
Credit Bank - $3,500
<u>Explanation:</u>
- Wages are an expense. An increase in the expense is a debit item.
- Bank is a current asset, a decrease in bank is a credit item.
<u>Transaction 7:</u>
<u>Issued a check for $320 to pay the monthly telephone bill. </u>
Debit - Utilities -$320
Credit - Bank - $320
<u>Explanation: </u>
- Utilities are an expense. An increase in the expense is a debit item.
- Bank is a current asset, a decrease in bank is a credit item.