Question

Sun Devil Hair Design has the following transactions during the month of February.(1) February 2 Pay $700 for radio advertising for February.(2) February 7 Purchase beauty supplies of $1,300 on account.(3) February 14 Provide beauty services of $2,900 to customers and receive cash.(4) February 15 Pay employee salaries for the current month of $900.(5) February 25 Provide beauty services of $1,000 to customers on account.(6) February 28 Pay utility bill for the current month of $300.Records each transaction

Answer 1

Answer:

Sun Devil Hair Design

Journal Entries:

February 2:

Debit Advertising Expense $700

Credit Cash Account $700

To record the payment for advertising for the month of February.

February 7:

Debit Supplies $1,300

Credit Accounts Payable $1,300

To record the purchase of supplies on account.

February 14:

Debit Cash Account $2,900

Credit Service Revenue $2,900

To record the provision of beauty services to customers for cash.

February 15:

Debit Salaries Expense $900

Credit Cash Account $900

To record the payment of employee salaries for the month.

February 25:

Debit Accounts Receivable $1,000

Credit Service Revenue $1,000

To record the provision of beauty services on account.

February 28:

Debit Utility Expense $300

Credit Cash Account $300

To record the payment of utility bill.

Explanation:

Sun Devil Hair Design uses the general journal to record the its daily business transactions.  The entries are made to reflect the accounting equation of Assets being equal to Liabilities + Equity at all times.  When entering transactions in the general journal, the first step is to identify the accounts that are affected by each transaction.  The account to be debited is recorded first followed by the account to be credited.  Note that more than two accounts can be involved.  However, with the double entry system of accounting, the accounting equation is always in balance.