Question

Question 2 --/1 View Policies Current Attempt in Progress Selected transactions for L. Takemoto, an interior decorating firm, in its first month of business, are shown below Jan. 2 Stockholders invested $15,000 cash in the business in exchange for common stock. 3 Purchased used car for $8,200 cash for use in the business. 9 Purchased supplies on account for $500. 11 Billed customers $1,800 for services performed. 16 Paid $200 cash for advertising. 20 Received $780 cash from customers billed on January 11. 23 Paid creditor $300 cash on balance owed. 28 Declared and paid a $500 cash dividend. For each transaction indicate the following. (a) The basic type of account debited and credited (Asset, Liability, Stockholders' Equity). (b) The specific account debited and credited (Cash, Rent Expense, Service Revenue, etc.). (c) Whether the specific account is increased or decreased. (d) The normal balance of the specific account.

Answer 1

Date	Particulars	Dr.	Cr.
2-Jan	cash	15000
	capital-common stock		15000
	(shares purchased by investors)
3-Jan	Car- office use	8200
	Cash		8200
	(purchased used car)
9-Jan	Supplies	500
	Accounts payable		500
	(supplies purchased on account)
11-Jan	Accounts Receivable	1800
	Services revenue		1800
	(billed for services given)
16-Jan	Advertising expense	200
	cash		200
	(paid expense in cash)
20 Jan'	Cash	780
	Accounts Receivable		780
	(cash received from debtors)
23-Jan	Accounts Payable	300
	cash		300
	(cash paid to creditors)
28-Jan	Dividends expense	500
	Cash		500
	(Dividends declared as well as paid)

based on above journal entries,

Transaction	Basic Type	Specific account	effect	normal balance	Basic Type	Specific account	effect	normal balance
2-Jan	Asset	Cash	Increase	15000	Shareholder's equity	Capital	Increase	15000
3-Jan	Asset	office Car	Increase	8200	Asset	Cash	Decrease	8200
9-Jan	Asset	Supplies	Increase	500	Liabilities- Current	Accounts Payable	Increase	500
11-Jan	Asset	Accounts Receivable	Increase	1800	Income	Services Revenue	Increase	1800
16-Jan	Expense	Advertising expense	Increase	200	Asset	Cash	Decrease	200
20-Jan	Asset	Cash	Increase	780	Asset	Accounts Receivable	Decrease	780
23-Jan	Liabilities-Current	Accounts Payable	Decrease	300	Asset	Cash	Decrease	300
28-Jan	Expense	Dividend Expense	Increase	500	Asset	Cash	Decrease	500