Question

Some of the ledger accounts for the Sanderson Hardware Company are listed below. For each of the October 2021 transactions numbered 1 through 10 below, indicate by account name which accounts should be debited and which should be credited when preparing journal entries. The company uses the perpetual inventory system. Assume that appropriate adjusting entries were recorded at the end of September.
Accounts payable Equipment Inventory
Accounts receivable Cash Supplies
Supplies expense Prepaid rent Sales revenue
Retained earnings Notes payable Common stock
Deferred sales revenue Rent expense Salaries payable
Cost of goods sold Salaries expense Interest expense

Accound debited Accound credited
1. Paid a cash dividend.
2. Paid rent for the next three months.
3. Sold goods to customers on account.
4. Purchased inventory on account.
5. Purchased supplies for cash.
6. Paid employees wages for September.
7. Issued common stock in exchange for cash.
8. Collected cash from customers for goods sold in 3.
9. Borrowed cash from a bank and signed a note.
10. At the end of October, recorded the amount of supplies that had been used during the month.
11. Received cash for advance payment from customer.
12. Accrued employee wages for October.

Answer 1

Answer:

1. Paid a cash dividend.

Account Debited:  Retained earnings

Account Credited: Cash

2. Paid rent for the next three months.

Account Debited:  Prepaid rent

Account Credited: Cash

3. Sold goods to customers on account.

Account Debited:  Account receivables

Account Credited:  Sales revenue

4. Purchased inventory on account.

Account Debited:  Inventory

Account Credited: Accounts payable

5. Purchased supplies for cash.

Account Debited:  Supplies

Account Credited: Cash

6. Paid employees wages for September.

Account Debited:  Wages payable

Account Credited: Cash

7. Issued common stock in exchange for cash.

Account Debited:  Cash

Account Credited: Common stock

8. Collected cash from customers for goods sold in 3.

Account Debited:  Cash

Account Credited: Account receivables

9. Borrowed cash from a bank and signed a note.

Account Debited:  Cash

Account Credited: Notes payables

10. At the end of October, recorded the amount of supplies that had been used during the month.

Account Debited:  Supplies expenses

Account Credited: Supplies

11. Received cash for advance payment from customer.

Account Debited:  Cash

Account Credited: Unearned revenue

12. Accrued employee wages for October.

Account Debited:  Wages expenses

Account Credited: Wages payable