Chapter 3, Problem 3.7BE

To determine

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.

Companies may use various kinds of journals, but every company has most common form of journal that is, the general journal.  Journal makes three significant contributions to the recording process. They are as follows:

• Complete effect of a business transaction disclosed in one place.
• Transactions are recorded in chronological order.
• It helps to prevent or locate errors.

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.

To journalize: the issuance of common stock in exchange of cash,

Equipment’s purchased on account, the rent paid for June month and after completing the welding work, bill sent to WW.