Question

For each item below, indicate whether a debitor credit applies. 1. Decrease in Notes Payable 2. Increase in Dividends Debit 3 Increase in Common Stock 4. Increase in Unearned Rent Revenue 5. Decrease in Interest Payable 6. Increase in Prepaid Insurance 7 Decrease in Salaries and Wages Expense Decrease in Supplies 8. 9. Increase in Revenues 10. Decrease in Accounts Receivable Credit

Answer 1

Ans:

Decrease in Notes Payable	Debit
Increase in dividends	Credit
Increase in Common stock	Credit
Increase in unearnd Rent revenue	Credit
Decrease in Interest Payable	Debit
Increase in Prepaid Insurance	Debit
Decrease in salaries and wages expense	Credit
Decrease in supplies	Debit
Increase in Revenues	Credit
Decrease in Accounts Receivables	Credit

Journal Entry

Larkspur, Inc.

Sr. No	Account Name	Debit ($)	Credit ($)
1.	Cash	$23500
	Common Stock		$23500
	(Being common stock issued for cash)
2.	Cash	$6900
	Notes Payable		$6900
	(Being Notes payable issued for obtaining loan)
3.	Equipment	$10800
	Cash		$10800
	(Being equipment purchased)
4.	Office Rent Expense	$1200
	Cash		$1200
	(Being office rent paid)
5.	Supplies expense	$1400
	Cash		$1400
	(Being cash paid for supplies)
6.	Advertisement Expense(Daily Herald)	$590
	Accounts payable		$590
	(Being expense on account for advertisement)
7.	Cash	$1960
	Accounts Receivable	$15640
	Service Revenue		$17600
	(Being services provided)
8.	Retained Earnings	$390
	Cash Dividend payable		$390
	(Being cash dividend paid)
9.	Utility expense	$1960
	Cash		$1960
	(Being csh paid for utility)
10.	Accounts Payable	$590
	Cash		$590
	(Being cash paid for Advertisement (Daily Herald))
11.	Interest Expense	$40
	Discount on Notes Payable		$40
	(Paid interest on bank loan obtained by issuing notes payable)
12.	Salaries expense	$6270
	Cash		$6270
	(Being salaries paid to employees)
13.	Cash	$11760
	Accounts Receivable		$11760
	(Being cash received for services provided)
14.	Income Tax expense	$1470
	Cash		$1470