John Smith
Items from Triguero’s retail music store
Classification
Normal Balance
A.
Amounts paid to a mall for rent.
Expense
Debit
B.
Amounts to be paid in 10 days to suppliers.
Liability
Credit
C.
A new fax machine purchased for office use.
Asset
Debit
D.
Land held as an investment.
Asset
Debit
E.
Amounts due from customers.
Asset
Debit
F.
Daily sales of merchandise sold.
Revenue
Credit
G.
Promotional costs to publicize a concert.
Expense
Debit
H.
A long-term loan owed to Citizens Bank.
Liability
Credit
I.
The albums, tapes, and CDs held for sale to customers.
Asset
Debit
2. May’s Transactions for Jennifer Royall Company
May’s Transactions for Jennifer Royall Company
Date
Description
Amount
How Balance is maintained
May 1
Invested cash of $25,000 and land valued at $15,000 into the business.
$40,000
Land (an asset) goes up by $40,000. This is offset by a $25,000 reduction in Cash. The balancing amount of $15,000 is reflected as an increase in the liability account Loan Payable.
May 5
Provided $1,000 of services to Jason Ratchford, a client, on account.
$1,000
The asset, Accounts Receivable (representing amounts due from customers for work already rendered), is increased, which is matched with an increase in Revenues, Income, and Equity.
May 9
Paid $1,250 of salaries to an employee.
$1,250
Cash is decreased, as is Income/Equity via the recording of Wages Expense.
May 14
Acquired a new computer for $4,200, on account.
$4,200
Supplies increase, as does the Accounts Payable liability account.
May 20
Collected $800 from Jason Ratchford for services provided on May 5.
$800
Cash is increased and Accounts Receivable is decreased, resulting in no change in total assets.
May 24
Borrowed $2,500 from BestBanc by securing a six-month loan.
$2,500
Cash on hand is increased by the same amount borrowed.
3. Balance sheet preparation. For the Preston Company
December 31, 20XX
Current assets Current
Classification
Normal Balance
A.
Amounts paid to a mall for rent.
Expense
Debit
B.
Amounts to be paid in 10 days to suppliers.
Liability
Credit
C.
A new fax machine purchased for office use.
Asset
Debit
D.
Land held as an investment.
Asset
Debit
E.
Amounts due from customers.
Asset
Debit
F.
Daily sales of merchandise sold.
Revenue
Credit
G.
Promotional costs to publicize a concert.
Expense
Debit
H.
A long-term loan owed to Citizens Bank.
Liability
Credit
I.
The albums, tapes, and CDs held for sale to customers.
Asset
Debit
2. May’s Transactions for Jennifer Royall Company
May’s Transactions for Jennifer Royall Company
Date
Description
Amount
How Balance is maintained
May 1
Invested cash of $25,000 and land valued at $15,000 into the business.
$40,000
Land (an asset) goes up by $40,000. This is offset by a $25,000 reduction in Cash. The balancing amount of $15,000 is reflected as an increase in the liability account Loan Payable.
May 5
Provided $1,000 of services to Jason Ratchford, a client, on account.
$1,000
The asset, Accounts Receivable (representing amounts due from customers for work already rendered), is increased, which is matched with an increase in Revenues, Income, and Equity.
May 9
Paid $1,250 of salaries to an employee.
$1,250
Cash is decreased, as is Income/Equity via the recording of Wages Expense.
May 14
Acquired a new computer for $4,200, on account.
$4,200
Supplies increase, as does the Accounts Payable liability account.
May 20
Collected $800 from Jason Ratchford for services provided on May 5.
$800
Cash is increased and Accounts Receivable is decreased, resulting in no change in total assets.
May 24
Borrowed $2,500 from BestBanc by securing a six-month loan.
$2,500
Cash on hand is increased by the same amount borrowed.
3. Balance sheet preparation. For the Preston Company
December 31, 20XX
Current assets Current