Question

1. Barry Cain invested $38,000 cash to start an appliance repair business. 2. Hired an employee to be paid $500 per week, starting tomorrow. 3. Paid two years' rent in advance, $10,800. 4. Paid the worker's weekly wage. 5. Recorded revenue earned and received for the week, $2,900.

Answer 1

Answer:

No.    Account Titles & Explanation             Debit          Credit

1.

       Cash                                                  $38,000

       Barry Capital Account                                         $38,000

2.

       No Entry Requires as Employee are only Hired there id no financial transaction involved in hiring the employees only.

3.

       Prepaid Rent                                     $10,800

       Cash                                                                     $10,800

4.

       Wages Expense                                $500

       Cash                                                                     $500

5.

       Cash                                                  $2,900

       Revenue                                                               $2,900

Explanation:

1. Cash paid is the capital contribution in the business so cash account will be debited and capital account will be credit as per their nature.

2. Hired an employee does not need any transaction as there is no financial  involvement in just hiring an employee.

3. Prepaid expense is actually an asset for us as we paid expenses in advance which is not incurred yet. It will be recognized as expense with passage of time.

4. Payment to worker is an expenses against a credit to cash as wage is paid in cash.

5. Revenue earned should be recorded and also received so cash will be debited for the receipt from sales and revenue shold be debited due to its nature of account.