Requirement – 1 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 for given transactions are as follows: February, 1– Service performed to a customer in cash: Date Accounts title and explanation Ref. Debit ($) Credit ($) February, 1 Cash 15,000 Service revenue 15,000 (To record cash received from customer for service) Table (1) Cash is an assets account and it increased the value of asset by $15,000. Hence, debit the cash account for $15,000. Service revenue is a revenue account and it increased the value of stockholder’s equity by $15,000. Hence, credit the service revenue account for $15,000. February, 2– Inventories purchased on account Date Accounts title and explanation Ref. Debit ($) Credit ($) February, 2 Inventory 11,000 Accounts payable 11,000 (To record purchase of inventory on account) Table (2) Inventory is an assets account and it increased the value of asset by $11,000. Hence, debit the inventory account for $11,000. Accounts payable is a liability account and it increased the value of liability by $11,000. Hence, credit the accounts payable account by $11,000. February, 2– Payment of advertising expense Date Accounts title and explanation Ref. Debit ($) Credit ($) February, 2 Advertising expense 2,000 Cash 2,000 (To record payment of advertising expense) Table (3) Advertising expense is an expenses account and it decreased the value of stockholder’s equity by $2,000. Hence, debit the advertising expense account for $2,000. Cash is an assets account and it decreased the value of asset by $2,000. Hence, credit the cash account for $2,000. February, 11 – Salary paid to employees Date Accounts title and explanation Ref. Debit ($) Credit ($) February, 11 Salary expense 75,000 Cash 75,000 (To record payment of salary expense to employees) Table (4) Salary expense is an expenses account and it decreased the value of stockholder’s equity by $75,000. Hence, debit the salary expense account for $75,000. Cash is an assets account and it decreased the value of asset by $75,000. Hence, credit the cash account for $75,000. February, 12– Cash borrowed from bank Date Accounts title and explanation Ref... Requirement – 2 To determine To discuss: The manner in which the given transactions are impacted in the assets, liabilities and equity of Company C.

Financial Accounting (12th Edition) (What's New in Accounting)

12th Edition

ISBN: 9780134725987

Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

Publisher: PEARSON

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Question

Chapter 2, Problem 2.72SC

Requirement – 1

To determine

To prepare: The journal entries for the given transaction.

Requirement – 2

To determine

To discuss: The manner in which the given transactions are impacted in the assets, liabilities and equity of Company C.

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Chapter 2, Problem 2.71CEP

Chapter 2, Problem 2.73DC

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Chapter 2 Solutions

Financial Accounting (12th Edition) (What's New in Accounting)

Ch. 2 - All of the following events at a sandwich shop are...Ch. 2 - Identify the asset from the following list of...Ch. 2 - Amounts owed to a company by its customers would...Ch. 2 - Thorpe Corporation purchases a new delivery truck...Ch. 2 - Adam Corporation issues stock to Cara Riley in...Ch. 2 - Blake Company completed a consulting job and...Ch. 2 - Prob. 7QC Ch. 2 - Accounts Payable had a normal beginning balance of...Ch. 2 - Which of the following debit and credit rules is...Ch. 2 - A companys beginning Cash balance was 8,000. At...

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