Chapter 2, Problem 2.7E

Associate debits and credits with external transactions (LO2–3)

Below are several external transactions for Hokies Company.

	Account Debited	Account Credited
Example: Purchase equipment in exchange for cash.	Equipment	Cash
1. Pay a cash dividend.	_____	_____
2. Pay rent in advance for the next three months.	_____	_____
3. Provide services to customers on account	_____	_____
4. Purchase office supplies on account.	_____	_____
5. Pay salaries for the current month.	_____	_____
6. Issue common stock in exchange for cash.	_____	_____
7. Collect cash from customers for services provided in (3) above.	_____	_____
8. Borrow cash from the bank and sign a note.	_____	_____
9. Pay for the current month’s utilities.	_____	_____
10. Pay for office supplies purchased in (4) above.	_____	_____

Hokies uses the following accounts:

Accounts Payable

Cash

Prepaid Rent

Common Stock

Salaries Payable

Equipment

Supplies

Rent Expense

Notes Payable

Salaries Expense

Accounts Receivable

Utilities Expense

Service Revenue

Retained Earnings

Dividends

Required:

Indicate which accounts should be debited and which should be credited.