Question

Exercise 2-10A Record transactions (LO2-4) Sun Devil Hair Design has the following transactions during the month of February.

Answer 1

Record transactions means to record the ledger entries

Explanation:

Proper understanding of the Double Entry Principle is important, it says that “For every Debit entry there must be a corresponding credit entry and vice versa”

It is also important to note that Debit the Receiver and Credit the giver - this is how transactions are recorded, understanding who is giving the money and who is receiving it.

Sun Devil Hair Design

Feb 2nd Dr Advertisement Account $700 and Cr Bank $700

Being advertising paid for the month of February

Feb 7th Dr Purchases Account $1,300

Cr Trade Creditor $1,300

Being purchases bought on credit

Feb 14th Dr Cash Account $2900

Cr Customers Account $2,900

Being cash sales

Feb 15 Dr Salaries $900

Cr Cash $900

Being salaries paid for the month of February

Feb 25 Dr Trade Receivables $1000

Cr Credit Sales $1000

Being goods bought on credit

Feb 28th Dr Utility $300

Cr cash $300

Being utility paid in cash

Note: It is important to include narrations of transactions that way any user of the account understands the transactions that have taken place

Answer 2

Answer:

(1) February 2 Pay $700 for radio advertising for February.

Debit  Advertising expense (p/l) $700

Credit Cash account $700

(2) February 7 Purchase beauty supplies of $1,300 on account.

Debit Beauty supplies $1,300

Credit Cash account $1,300

(3) February 14 Provide beauty services of $2,900 to customers and receive cash.

Debit Cash account $2,900

Credit Revenue services $2,900

(4) February 15 Pay employee salaries for the current month of $900.

Debit Salaries expense     $900

Credit Cash account          $900

(5) February 25 Provide beauty services of $1,000 to customers on account.

Debit Accounts receivable $1,000

Credit Revenue services    $1,000

(6) February 28 Pay utility bill for the current month of $300.

Debit Utility expense    $300

Credit Cash account     $300

Explanation:

Expenses usually have debit balances, revenue credit balances.

The receipt of cash is a debit entry to the account while the payment of cash is a credit entry to the cash account.

Where cash is not paid to the entry that provides a service, a receivable is recorded.