1. Explanation Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and equities. Credit, all increase in liabilities, revenues, and equities, all decrease in assets, and expenses. Prepare the journal entries for the given transactions as follows: a. Paid cash $2,000 on account payable for office supplies. Date Account Title and Explanation Post Ref. Debit ($) Credit ($) Account Payable 2,000 Cash 2,000 (To record payment on accounts payable) Table (1) Account Payable is a liability account, and it decreases the value of liability by $2,000. Hence, debit the Account Payable account for $2,000. Cash is an asset account, and it decreases the value of assets by $2,000. Hence, credit the cash account for $2,000. b. Company paid $1,200 cash for salary of the receptionist. Date Account Title and Explanation Post Ref. Debit ($) Credit ($) Salaries Expense 1,200 Cash 1,200 (To record the payment made for the salary expenses) Table (2) Salaries expense is an expense account and it is increased by $1,200. Expenses are the component of stockholder’s Equity and it decreases the value of equity. Therefore, debit Salaries expenses account with $1,200. Cash is an asset account, and it decreases the value of assets by $1,200. Hence, credit the cash account for $1,200. c. Company paid cash worth $39,000 for the purchase of equipment. Date Account Title and Explanation Post Ref... 2. To determine Match each transaction with the given reasons for not recording an expense as revenue.

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ISBN: 9781260158601

Author: Wild

Publisher: MCG

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Chapter 2, Problem 11E

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Prepare the journal entries for the given transactions.

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Match each transaction with the given reasons for not recording an expense as revenue.

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Prepare the journal entries for the given transactions.

Solution Summary: The author explains the rules of debiting and crediting different accounts while they occur in business transactions.

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Prepare the journal entries for the given transactions.

Match each transaction with the given reasons for not recording an expense as revenue.

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