Chapter 2, Problem 2.7E

Transaction analysis; debits and credits

• LO2–2

Some of the ledger accounts for the Sanderson Hardware Company are numbered and listed below. For each of the October 2018 transactions numbered 1 through 12 below, indicate by account number which accounts should be debited and which should be credited. The company uses the perpetual inventory system. Assume that appropriate adjusting entries were recorded at the end of September.

1. (1) Accounts payable
2. (2) Equipment
3. (3) Inventory
4. (4) Accounts receivable
5. (5) Cash
6. (6) Supplies
7. (7) Supplies expense
8. (8) Prepaid rent
9. (9) Sales revenue
10. (10) Retained earnings
11. (11) Note payable
12. (12) Common stock
13. (13) Deferred revenue
14. (14) Rent expense
15. (15) Salaries and wages payable
16. (16) Cost of goods sold
17. (17) Salaries and wages expense
18. (18) Interest expense

	Account(s) Debited	Account(s) Credited
Example: Purchased inventory for cash	3	5

1. 1. Paid a cash dividend.
2. 2. Paid rent for the next three months.
3. 3. Sold goods to customers on account.
4. 4. Purchased inventory on account.
5. 5. Purchased supplies for cash.
6. 6. Paid employee salaries and wages for September.
7. 7. Issued common stock in exchange for cash.
8. 8. Collected cash from customers for goods sold in 3.
9. 9. Borrowed cash from a bank and signed a note.
10. 10. At the end of October, recorded the amount of supplies that had been used during the month.
11. 11. Received cash for advance payment from customer.
12. 12. Accrued employee salaries and wages for October.