Question

Derrick Wells decided to start a dental practice. The first five transactions for the business follow.  

1. Derrick invested $81,000 cash in the business.
2. Paid $21,000 in cash for equipment.
3. Performed services for cash amounting to $8,100.
4. Paid $2,900 in cash for advertising expense.
5. Paid $2,100 in cash for supplies.

(1) Select which two accounts are affected in each of the above transactions.
(2&3) Post the above transactions into the appropriate T accounts.

Post the above transactions into the appropriate T accounts.

	Cash Equipment (1) (1) (2) Bal. 0 Bal. 0 Fees Income Advertising Expense (1) (1) Bal. 0 Bal. 0 Supplies Derrick Wells, Capital (1) (1) Bal. 0 Bal. 0

Answer 1

(1)

(i) Accounts involved are cash and Derrick Wells, capital

(ii) Accounts involved are cash and equipment.

(iii) Accounts involved are cash and service revenue (Fee income)

(iv) Accounts involved are cash and advertising expense.

(v) Accounts involved are cash and supplies.

(2)

Cash Account

Capital	81,000	Equipment	21,000
Fee income	8,100	Advertising expense	2,900
		Supplies	2,100
		Balance c/d	63,100
	89,100		89,100
Balance b/d	63,100

Equipment Account

Cash	21,000	Balance c/d	21,000
	21,000		21,000
Balance b/d	21,000

Fee income

Balance c/d	8,100	Cash	8,100
	8,100		8,100
		Balance b/d	8,100

Advertising expense

Cash	2,900	Balance c/d	2,900
	2,900		2,900
Balance b/d	2,900

Supplies Account

Cash	2,100	Balance c/d	2,100
	2,100		2,100
Balance b/d	2,100

Derrick Wells, Capital

Balance c/d	81,000	Cash	81,000
	81,000		81,000
		Balance b/d	81,000