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Required Record each of the following Fred Co. events in T-accounts: a. Received $10,500 cash by issuing common stock. Cash Common Stock Debit Credit Debit Credit b. Purchased supplies for $940 cash. Cash Supplies Debit Credit Debit Credit

Required Record each of the following Fred Co. events in T-accounts: a. Received $10,500 cash by issuing common stock. Cash Common Stock Debit Credit Debit Credit b. Purchased supplies for $940 cash. Cash Supplies Debit Credit Debit Credit

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Accounting Transactions: Analyzing Debits and Credits** ### c. Purchased Land for $5,300 Cash When a company purchases land using cash, it affects both the Cash and Land accounts. Here is the detailed journal entry and explanation: #### Journal Entry: - **Land** (Debit): $5,300 - **Cash** (Credit): $5,300 This transaction involves two accounts: 1. **Cash:** - Debit: (Empty) - Credit: $5,300 2. **Land:** - Debit: $5,300 - Credit: (Empty) **Explanation:** - **Debit**: When you debit the Land account, it indicates an increase in assets because the company now owns more land. - **Credit**: When you credit the Cash account, it denotes a decrease in assets because cash is going out of the business. ### d. Performed Services for $4,700 Cash When a company performs services and receives cash, it impacts both the Cash and Service Revenue accounts. Here is the detailed journal entry and explanation: #### Journal Entry: - **Cash** (Debit): $4,700 - **Service Revenue** (Credit): $4,700 This transaction involves two accounts: 1. **Cash:** - Debit: $4,700 - Credit: (Empty) 2. **Service Revenue:** - Debit: (Empty) - Credit: $4,700 **Explanation:** - **Debit**: When you debit the Cash account, it signifies an increase in assets as the company receives cash. - **Credit**: When you credit the Service Revenue account, it indicates an increase in equity because the company earns revenue from the services performed. Both of these entries follow the fundamental accounting equation, ensuring that the total debits equal the total credits, thereby maintaining the balance in the accounting ledger.
Transcribed Image Text:**Accounting Transactions: Analyzing Debits and Credits** ### c. Purchased Land for $5,300 Cash When a company purchases land using cash, it affects both the Cash and Land accounts. Here is the detailed journal entry and explanation: #### Journal Entry: - **Land** (Debit): $5,300 - **Cash** (Credit): $5,300 This transaction involves two accounts: 1. **Cash:** - Debit: (Empty) - Credit: $5,300 2. **Land:** - Debit: $5,300 - Credit: (Empty) **Explanation:** - **Debit**: When you debit the Land account, it indicates an increase in assets because the company now owns more land. - **Credit**: When you credit the Cash account, it denotes a decrease in assets because cash is going out of the business. ### d. Performed Services for $4,700 Cash When a company performs services and receives cash, it impacts both the Cash and Service Revenue accounts. Here is the detailed journal entry and explanation: #### Journal Entry: - **Cash** (Debit): $4,700 - **Service Revenue** (Credit): $4,700 This transaction involves two accounts: 1. **Cash:** - Debit: $4,700 - Credit: (Empty) 2. **Service Revenue:** - Debit: (Empty) - Credit: $4,700 **Explanation:** - **Debit**: When you debit the Cash account, it signifies an increase in assets as the company receives cash. - **Credit**: When you credit the Service Revenue account, it indicates an increase in equity because the company earns revenue from the services performed. Both of these entries follow the fundamental accounting equation, ensuring that the total debits equal the total credits, thereby maintaining the balance in the accounting ledger.
## Accounting T-Accounts ### Instructions: Record each of the following Fred Co. events in T-accounts. ### Transactions: #### a. Received $10,500 cash by issuing common stock. For this transaction, the Cash account is debited, and the Common Stock account is credited. **T-Account Representation:** ``` Cash Common Stock ----------------- ----------------- | Debit | Credit | | Debit | Credit | | $10,500 | | | $10,500 | ----------------- ----------------- ``` #### b. Purchased supplies for $940 cash. For this transaction, the Supplies account is debited, and the Cash account is credited. **T-Account Representation:** ``` Cash Supplies ----------------- ----------------- | Debit | Credit | | Debit | Credit | | | $940 | | $940 | | ----------------- ----------------- ``` ### Explanation of Diagrams: **T-Accounts Overview:** 1. **Cash and Common Stock T-Account:** - **Cash Account:** - Debit Side: Increase in assets. $10,500 is recorded as a debit, indicating an inflow of cash. - Credit Side: No entry for this transaction. - **Common Stock Account:** - Debit Side: No entry for this transaction. - Credit Side: Increase in equity. $10,500 is recorded as a credit, indicating the issuance of common stock. 2. **Cash and Supplies T-Account:** - **Cash Account:** - Debit Side: No entry for this transaction. - Credit Side: Decrease in assets. $940 is recorded as a credit, indicating an outflow of cash for purchasing supplies. - **Supplies Account:** - Debit Side: Increase in assets. $940 is recorded as a debit, indicating the acquisition of supplies. - Credit Side: No entry for this transaction.
Transcribed Image Text:## Accounting T-Accounts ### Instructions: Record each of the following Fred Co. events in T-accounts. ### Transactions: #### a. Received $10,500 cash by issuing common stock. For this transaction, the Cash account is debited, and the Common Stock account is credited. **T-Account Representation:** ``` Cash Common Stock ----------------- ----------------- | Debit | Credit | | Debit | Credit | | $10,500 | | | $10,500 | ----------------- ----------------- ``` #### b. Purchased supplies for $940 cash. For this transaction, the Supplies account is debited, and the Cash account is credited. **T-Account Representation:** ``` Cash Supplies ----------------- ----------------- | Debit | Credit | | Debit | Credit | | | $940 | | $940 | | ----------------- ----------------- ``` ### Explanation of Diagrams: **T-Accounts Overview:** 1. **Cash and Common Stock T-Account:** - **Cash Account:** - Debit Side: Increase in assets. $10,500 is recorded as a debit, indicating an inflow of cash. - Credit Side: No entry for this transaction. - **Common Stock Account:** - Debit Side: No entry for this transaction. - Credit Side: Increase in equity. $10,500 is recorded as a credit, indicating the issuance of common stock. 2. **Cash and Supplies T-Account:** - **Cash Account:** - Debit Side: No entry for this transaction. - Credit Side: Decrease in assets. $940 is recorded as a credit, indicating an outflow of cash for purchasing supplies. - **Supplies Account:** - Debit Side: Increase in assets. $940 is recorded as a debit, indicating the acquisition of supplies. - Credit Side: No entry for this transaction.
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