QuestionRecord the following transactions: Issue stock for \$21,000, loan \$9,000, buy equipment for \$25,000, advertising \$1,100, services \$18,000. Use accounts: Cash, Accounts Receivable, Equipment, Notes Payable, Common Stock, Service Revenue, Advertising Expense, Salaries Expense.
Studdy Solution
STEP 1
Assumptions1. The company uses double-entry bookkeeping, which means for every debit entry there must be a corresponding credit entry. . The company uses the following accounts Cash, Accounts Receivable, Equipment, Notes Payable, Common Stock, Service Revenue, Advertising Expense, and Salaries Expense.
STEP 2
For the transaction on March1, the company issued common stock for . This means the company received cash and issued common stock. So, we debit Cash and credit Common Stock.
\begin{tabular}{|c|c|c|c|}
\hline Date & General Journal & Debit & Credit \\
\hline March01 & Cash & \$21,000 & \\
\hline & Common Stock & & \$21,000 \\
\hline\end{tabular}
STEP 3
On March5, the company obtained a loan from the bank by signing a note. This means the company's cash increases and it has a liability in the form of a note payable. So, we debit Cash and credit Notes Payable.
\begin{tabular}{|c|c|c|c|}
\hline Date & General Journal & Debit & Credit \\
\hline March05 & Cash & \$9,000 & \\
\hline & Notes Payable & & \$9,000 \\
\hline\end{tabular}
STEP 4
On March10, the company purchased construction equipment for cash. This means the company's equipment increases and its cash decreases. So, we debit Equipment and credit Cash.
\begin{tabular}{|c|c|c|c|}
\hline Date & General Journal & Debit & Credit \\
\hline March10 & Equipment & \$25,000 & \\
\hline & Cash & & \$25,000 \\
\hline\end{tabular}
STEP 5
On March22, the company provided advertising for the current month for cash. This is an expense for the company and its cash decreases. So, we debit Advertising Expense and credit Cash.
\begin{tabular}{|c|c|c|c|}
\hline Date & General Journal & Debit & Credit \\
\hline March22 & Advertising Expense & \$1,100 & \\
\hline & Cash & & \$1,100 \\
\hline\end{tabular}
STEP 6
On March27, the company received and provided construction services for on account. This means the company's cash increases, it has an account receivable, and it has earned revenue. So, we debit Cash and Accounts Receivable, and credit Service Revenue.
\begin{tabular}{|c|c|c|c|}
\hline Date & General Journal & Debit & Credit \\
\hline March27 & Cash & \$13,000 & \\
\hline & Accounts Receivable & \$5,000 & \\
\hline & Service Revenue & & \$18,000 \\
\hline\end{tabular}
STEP 7
On March28, the company paid salaries. The problem does not specify the amount of salaries, so let's assume it's . This is an expense for the company and its cash decreases. So, we debit Salaries Expense and credit Cash.
\begin{tabular}{|c|c|c|c|}
\hline Date & General Journal & Debit & Credit \\
\hline March28 & Salaries Expense & \$X & \\
\hline & Cash & & \$X \\
\hline\end{tabular}
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