E2-7 Below are several external transactions for Hokies Company.
Example: Purchase equipment in exchange for cash.
1. Pay a cash dividend.
2. Pay rent in advance for the next three months.
3. Provide services to customers on account.
4. Purchase office supplies on account.
5. Pay salaries for the current month.
6. Issue common stock in exchange for cash.
7. Collect cash from customers for services
provided in (3) above.
8. Borrow cash from the bank and sign a note.
9. Pay for the current month's utilities.
10. Pay for office supplies purchased in (4) above.
Hokies uses the following accounts:
Accounts Payable
Cash
Prepaid Rent
Common Stock
Salaries Payable
Required:
Equipment
Supplies
Rent Expense
Notes Payable
Salaries Expense
Account
Account
Debited
Credited
Equipment Cash
Accounts Receivable
Utilities Expense
Service Revenue
Retained Earnings
Dividends
Indicate which accounts should be debited and which should be credited.
E2-8 Terrapin Company engages in the following external transactions for November.
1. Purchase equipment in exchange for cash of $23,400.
2. Provide services to customers and receive cash of $6,800.
3. Pay the current month's rent of $1,300.
4. Purchase office supplies on account for $1,000.
5. Pay employee salaries of $2,100 for the current month.
Required:
Record the transactions. Terrapin uses the following accounts: Cash, Supplies, Equipment,
Accounts Payable, Service Revenue, Rent Expense, and Salaries Expense.
E2-9 Below are recorded transactions of Yellow Jacket Corporation for August.
Debit
Credit
1. Equipment.
8,800
Cash.
8,800
2. Accounts Receivable.
3,200
Service Revenue
3,200
3. Salaries Expense
1,900
Cash
1,900
4. Cash
1,500
Deferred Revenue..
1,500
5. Dividends.
900
Cash.
900
