Question

Selected transactions for Front Room, an interior decorator corporation, in its first month of business, are as follows. 1. 2. 3. 4. 5. 6. 7. 8. Issued stock to investors for $13,000 in cash. Purchased used car for $10,000 cash for use in business. Purchased supplies on account for $200. Billed customers $3,700 for services performed. Paid $100 cash for advertising start of the business. Received $1,100 cash from customers billed in transaction (4). Paid creditor $150 cash on account. Paid dividends of $300 cash to stockholders. For each transaction indicate the basic type of account debited and credited (asset, liability, stockholders' equity); the specific account debited and credited (Cash, Rent Expense, Service Revenue, etc.); whether the specific account is increased or decreased; and the normal balance of the specific account. No. Basic Type 1. Asset Account Debited Specific Account Effect Cash Increase Normal Balance Debit Basic Type Stockholders' Equity Account Credited Specific Account Effect Common Stock Increase Normal Balance Credit

Answer 1

Credit Debit $ 13,000 No. $ 13,000 $ 10,000 2. 3. $ 10,000 $ 200 Account Debited Account Credited Basic Type Specific Account Effect Normal Balance Basic Type Specific Account Effect Normal Balance Asset Cash Increase Debit Stockholder's Equity. Common Stock Increase Credit Asset Vehicle Increase Debit Asset Cash Decrease Debit Asset Supplies Increase Debit Liability Accounts Payable Increase Credit Asset Accounts Receivable Increase Debit Stockholder's Equity Service Revenue Increase Credit Stockholder's Equity Advertising Expenses Increase Debit Asset Cash Decrease Debit Asset Cash Increase Debit Asset Accounts Receivable Decrease Debit Liability Accounts Payable Decrease Credit Asset Cash Decrease Debit Stockholder's Equity Dividend Increase Debit Asset Cash Decrease Debit 4. $ 200 15. 16. $ No Account Title & Explanation 1. Cash Common Stock 2. Vehicle- Company Car Cash 3. Supplies Accounts Payable 4. Accounts Receivable Service Revenue Advertising Expenses Cash 6. Cash Accounts Receivable Accounts Payable Cash Dividend Cash 3,700 $ 3,700 100 8. $ 100 $ 1,100 $ 1,100 $ 150 $ 150 $ 300 $ 300