Question

Prepare the necessary Journal Entry to record these transactions. If an entry is not required for any of these transactions, state this and explain why. 

Otto Enterprise received January invoices for: Telephone Expense - $290, Consulting Expense - $4,800, Legal Expense - $2,800 and Utilities Expense - $630; these were all paid by check.

Answer 1

The journal entry would be-

Telephone expenses Dr. $ 290

Consultancy Expenses Dr. $ 4,800

Legal expenses Dr. $ 2,800

Utilities expenses Dr. $ 630

Bank Cr. $ 8,520

[To expenses paid out of bank]

Explanation-

All the expenses have debit balance in its own,on increase of this expenses the account will be debited and on decrease of these expenses accounts will be credited.In the given case all the expenses are increasing, hence these expenses have been debited.

Similarly the bank account has debit balanace in its own,on increase of this expenses the account will be debited and on decrease of these expenses accounts will be credited.In the given case the bank have been reduced, hence this account has beeen credited.

Please comment for any additionale explanation,

Thanks,