Question

gPlease record the following items in journal entry format. Clearly indicate the (a) account name (b) whether it is a (debit) or (credit) and (c) the amount. See my example below: The firm bought supplies for $6,400 on account. The firm purchased land for $450,000, $160,000 of which was paid in cash and a note payable signed for the balance. The firm paid for the supplies ($6,400) purchased on account above. The firm paid $1,000 for salaries for the month. The firm accepted cash for repair services made in the amount of $5,000 and billed additional customers for repair services of the amount of $2,500 The firm received cash from customers on account in the amount of $2,000 . The firm repaid $16,000 of its loan. The firm paid the rent and utility bill for the month for $2,000 The firm paid a cash dividend of $1,000. Example: The firm purchased Equipment for $1,000. Clearly indicate the (a) account name (b) whether it is a (debit) or (credit) and (c) the amount Correct way to answer: Equipment (debit) $1,000 Cash (credit) $1,000

Answer 1

Answer:

Journal Entry Format:

1. Supplies (debit) $6,400 Accounts payable (credit) $6,400

2. Land (debit) $450,000 Cash (credit) $160,000 Notes Payable (credit) $290,000

3. Accounts payable (debit) $6,400 Cash (credit) $6,400

4. Salaries Expense (debit) $1,000 Cash (credit) $1,000

5. Cash (debit) $5,000 Service Revenue (credit) $1,000

6. Accounts receivable $2,500 Service Revenue (credit) $2,500

7. Cash (debit) $2,000 Accounts receivable (credit) $2,000

8. Dividends (debit) $1,000 Cash (credit $1,000

Explanation:

With the above journal format, the account that receives value is debited while the account that gives value is credited.  This follows the accounting principle of debiting the receiver and crediting the giver.   It shows that assets, expenses, and losses have debit balances while liabilities, equity, gains, and revenues have credit balances.