Question

Exercise 2 Presented below is information related to Lexington Real Estate Agency de 1 Diane l ex ngton begins business as a real estate agent with a cash investment of $17,400 İn exchange for common stock. 2 Hires an administrative assistant. office furniture for $1,950, on account. 6 Sells a house and lot for N. Fennig; bills N. Fennig $3,850 for realty services performed 27 Pays $600 on the balance related to the transaction of October 3. 30 Pays the administrative assistant $2,500 in salary for October Prepare the debit credit analysis for each transaction. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Affect on Oct. 1 Debits Credit Oct. 2 Debits Oct. 3 Debits Oct. 6 Debits Debit Oct. 27 Debits Debit Oct. 30 Debits : Debit LIST OF

Answer 1

Debit-Credit Analysis
Affect on Accounting Equation					Affect on Amounts
1-Oct	Debits	Increases Assets	Debit	Cash	$17,400
	Credits	Increases stockholders equity	Credit	Common stock	$17,400
2-Oct	Debits	No Entry	Debit	No Entry	$0
	Credits	No Entry	Credit	No Entry	$0
3-Oct	Debits	Increases assets	Debit	Office furniture	$1,950
	Credits	Increases liabilities	Credit	Accounts payable	$1,950
6-Oct	Debits	Increases assets	Debit	Accounts receivable	$3,850
	Credits	Increases revenue	Credit	Service revenue	$3,850
27-Oct	Debits	Decreases liabilities	Debit	Accounts payable	$600
	Credits	decreases assets	Credit	Cash	$600
30-Oct	Debits	Increases expense	Debit	Salaries expense	$2,500
	Credits	Decreases assets	Credit	Cash	$2,500
Explanation
1-Oct	The owner as provided cash for common stock and hence the cash balance which is asset would increase
	The common stock is part of stockholders equity and issue of share will increase the common stock value
2-Oct	The hiring of assistant does not impact the financials of the company and therefore this act will have no impact on the financials as no amount is involved
3-Oct	The office furniture is an asset and purchase of asset would increase the asset of the company
	The office is purchase on credit that is payment will be made after certain date and hence there is liability to make payment and so liability would increase
6-Oct	Company has provided services and therefore company can recognize revenue for the services provided and so revenue of the company would increase
	The payment is yet to be received from customer and so the receivable is an asset of the company and so the assets of the company would increase.
27-Oct	The payment to the supplier for office furniture will reduce the liability and cash of the company as the balance of both would reduce
30-Oct	Salary is an expense of the company and since salary is accrued it will be recognized as expense and expenses of the company will increase
	Payment of salary is cash outflow for the company and so cash balance of the company would reduce.