Question

For each transaction, indicate the account or accounts that should be debited and credited.

Accounts

1. Cash
2. Accounts Receivables
3. Prepaid Insurance
4. Office Supplies
5. Automobiles
6. Land
7. Accounts Payable
8. Income Taxes Payable
9. Notes Payable
10. Capital Stock
11. Retained Earnings
12. Service Revenue
13. Wage and Salary Expense
14. Utilities Expense
15. Income Tax Expense
Transactions Debited Credited

Example: Purchased office supplies for cash 4 1

a. Issued capital stock for cash. __ __

b. Purchased an automobile and signed a 60-day note for the total amount. __ __

c. Acquired land in exchange for capital stock. __ __

d. Received cash from clients for services performed during the month. __ __

e. Paid employee’s salaries and wages earned during the month. __ __

f. Purchased flyers and signs from a printer, payment due in 10 days __ __

g. Paid for the flyers and signs purchased in (f) __ __

h. Received monthly telephone bill, payment is due with 10 days of receipt. __ __

i. Paid for a six-month liability insurance policy. __ __

j. Paid monthly telephone bill. __ __

k. Computed amount of taxes due based on the income of the period and paid the amount. __ __

Answer 1

Solution

	Debit	Credit
a. Issued capital stock for cash. __ __	1	10
b. Purchased an automobile and signed a 60-day note for the total amount. __ __	5	9
c. Acquired land in exchange for capital stock. __ __	6	10
d. Received cash from clients for services performed during the month. __ __	1	12
e. Paid employee’s salaries and wages earned during the month. __ __	13	1
f. Purchased flyers and signs from a printer, payment due in 10 days __ __	4	7
g. Paid for the flyers and signs purchased in (f) __ __	7	1
h. Received monthly telephone bill, payment is due with 10 days of receipt. __ __	14	7
i. Paid for a six-month liability insurance policy. __ __	3	1
j. Paid monthly telephone bill. __ __	14	1
k. Computed amount of taxes due based on the income of the period and paid the amount. __ __	15	1