Explanation Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. 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 stockholders’ equities. Credit , all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. Journal entries for the given transaction are as follows: September, 3 – Cash borrowed from bank: Date Accounts Post Ref. Debit ($) Credit ($) September, 3 Cash 35,000 Notes payable 35,000 (To record cash borrowed from bank) Table (1) Cash is an assets account and it increased the value of asset by $35,000. Hence, debit the cash account for $35,000. Notes payable is a liability account, and it increased the value of liabilities by $35,000. Hence, credit the notes payable for $35,000. September, 9 – Service performed on account: Date Accounts Post Ref. Debit ($) Credit ($) September, 9 Accounts receivable 1,250 Service revenue 1,250 (To record service performed to customer on account) Table (2) Accounts receivable is an assets account and it increased the value of asset by $1,250. Hence, debit the accounts receivable account for $1,250. Service revenue is a component of stockholder’s equity and it increased the value of stockholder’s equity by $1,250. Hence, debit the service revenue account for $1,250. September, 16 – Cash received from credit customer: Date Accounts Post Ref. Debit ($) Credit ($) September, 16 Cash 500 Accounts receivable 500 (To record cash received from customer) Table (3) Cash is an assets account and it increased the value of asset by $500...

5th Edition

ISBN: 9780134728858

Author: Kemp

Publisher: PEARSON CO

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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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