Question

Identify the two accounts affected by each of the following transactions and indicate whether each account is debited or credited. January 1: John David invested $50,000 in his business. January 4: Billed a customer for goods supplied worth $7,000. January 9: Issued a check for inventory purchased worth $10,000. January 12: Salaries paid to the staff $5,000.

Answer 1

Answer:

1-

Cash 50,000 debit

Jhon David Capital Account credit

2-

account receivable 7,000 debit

sales revenue 7,000 credit

3-

Inventory 10,000 debit

cash 10,000 credit

4-

salaries expense 5,000 debit

cash 5,000 credit

Explanation:

1-

Jhon contribution must enter the accounting under his name.

it is an equity account so it increases from credit.

while the cash he invests is an asset. Asset increase from debit

2-

the billed good will be sales revenue, revenue increase from credit.

the bill give us the right to claim that amount to our customer. this creates an asset. As stated before, it increases from debit

3-

the inventory purchased is an asset, increase from debit

the cash we use is an asset being traded. it is leaving the business, we have to decrease the cash asset. it will be credit

4-

the salaries are an expense as the amount would not generate income in the future.

the cash used decrease the amount of cash asset, so it will be credit like in previous question