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 of Company T are as follows: November, 1 – Issuance of common stock: Date Accounts Post Ref. Debit ($) Credit ($) November, 1 Cash 70,000 Common stock 70,000 (To record the issuance of common stock) Table (1) Cash is an assets account and it increased the value of asset by $70,000. Hence, debit the cash account for $70,000. Common stock is a component of stockholder’s equity and it increased the value of stockholder’s equity by $70,000, Hence, credit the common stock for $70,000. November, 3 – Office supplies purchased in cash: Date Accounts Post Ref. Debit ($) Credit ($) November, 3 Supplies 275 Cash 275 (To record office supplies purchased in cash) Table (2) Supplies are an assets account and it increased the value of asset by $275. Hence, debit the supplies account for $275. Cash is an assets account and it decreased the value of asset by $275. Hence, credit the cash account for $275. November, 8 – Land purchased in cash: Date Accounts Post Ref. Debit ($) Credit ($) November, 8 Land 34,000 Cash 34,000 (To record purchase of land in cash) Table (3) Land is an assets account and it increased the value of asset by $34,000. Hence, debit the land account for $34,000. Cash is an assets account and it decreased the value of asset by $34,000. Hence, credit the cash account for $34,000. November, 12 – Office equipment purchased on account: Date Accounts Post Ref. Debit ($) Credit ($) November, 12 Office equipment 3,300 Accounts payable 3,300 (To record purchase of office equipment on account) Table (4) Office equipment is an assets account and it increased the value of asset by $3,300. Hence, debit the office equipment account for $3,300. Accounts payable is a liability account and it increased the value of liability by $3,300. Hence, credit the liability account by $3,300. November, 17 – Cash borrowed from bank: Date Accounts Post Ref. Debit ($) Credit ($) November, 17 Cash 50,000 Notes payable 50,000 (To record cash borrowed from bank) Table (5) Cash is an assets account and it increased the value of asset by $50,000...

Financial Accounting, Student Value Edition (4th Edition)

4th Edition

ISBN: 9780134114811

Author: Robert Kemp, Jeffrey Waybright

Publisher: PEARSON

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Chapter 2 Solutions

Financial Accounting, Student Value Edition (4th Edition)

Ch. 2 - The order in which assets were listed and...Ch. 2 - Prob. 2DQ Ch. 2 - How is revenue related to retained earnings?Ch. 2 - Prob. 4DQ Ch. 2 - Prob. 5DQ Ch. 2 - Prob. 6DQ Ch. 2 - Prob. 7DQ Ch. 2 - Distinguish between journalizing and posting.Ch. 2 - True or false: If the trial balance is in balance,...Ch. 2 - When it is time to prepare the financial...

Ch. 2 - Which sequence of actions correctly summarizes the...Ch. 2 - Prob. 2SC Ch. 2 - Prob. 3SC Ch. 2 - Prob. 4SC Ch. 2 - Prob. 5SC Ch. 2 - Which journal entry records obtaining a bank loan...Ch. 2 - RV Wholesale, Inc., paid 1,200 for supplies and...Ch. 2 - Prob. 8SC Ch. 2 - Prob. 9SC Ch. 2 - Prob. 10SC Ch. 2 - Prob. 11SC Ch. 2 - Prob. 12SC Ch. 2 - Prob. 1SE Ch. 2 - Prob. 2SE Ch. 2 - Prob. 3SE Ch. 2 - Prob. 4SE Ch. 2 - Accounting terminology (Learning Objectives 2, 3, ...Ch. 2 - Effects of debits and credits on accounts...Ch. 2 - Balancing accounts and normal balances (Learning...Ch. 2 - Types of accounts and effects of debits and...Ch. 2 - Prob. 9SE Ch. 2 - Journalizing transactions (Learning Objective 3)...Ch. 2 - Prob. 11SE Ch. 2 - Prob. 12SE Ch. 2 - Prob. 13SE Ch. 2 - Accounting terminology (Learning Objectives 1, 2,...Ch. 2 - Prob. 15AE Ch. 2 - Journalizing transactions (Learning Objective 3)...Ch. 2 - Prob. 17AE Ch. 2 - Prob. 18AE Ch. 2 - Prob. 19AE Ch. 2 - Prob. 20AE Ch. 2 - Prob. 21AE Ch. 2 - Prob. 22AE Ch. 2 - Prob. 23BE Ch. 2 - Prob. 24BE Ch. 2 - Prob. 25BE Ch. 2 - Prob. 26BE Ch. 2 - Prob. 27BE Ch. 2 - Prob. 28BE Ch. 2 - Prob. 29BE Ch. 2 - Prob. 30BE Ch. 2 - Prob. 31AP Ch. 2 - Prob. 32AP Ch. 2 - Prob. 33AP Ch. 2 - Prob. 34AP Ch. 2 - Prob. 35AP Ch. 2 - Prob. 36AP Ch. 2 - Prob. 37BP Ch. 2 - Prob. 38BP Ch. 2 - Prob. 39BP Ch. 2 - Prob. 40BP Ch. 2 - Prob. 41BP Ch. 2 - Prob. 42BP Ch. 2 - Prob. 1CE Ch. 2 - Prob. 1CP Ch. 2 - Prob. 1CFSAP Ch. 2 - Prob. 1EIA Ch. 2 - Prob. 2EIA Ch. 2 - Prob. 1FA Ch. 2 - Prob. 1IA Ch. 2 - Prob. 1SBA Ch. 2 - Prob. 1WC

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

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