Question

Transactions for Jayne Company for the month of June are presented below.
June
1 Issues common stock to investors In exchange for $5,000 cash.
2 Buys equipment on account for $1, 100.
3 Pays $740 to landlord for June rent. 12 Bills Will Wheaton $700 for welding work done.
Identify the accounts to be debited and credited for each transaction.

Answer 1

Answer:

1. Cash account debited; Common stock credited
2. Fixed assets (equipment account) debited; Accounts payable credited
3. Rent expense debited, Cash credited
4. Accounts reeivable debited, Service revenue credited

Explanation:

The full accounting entries relating to the above are:

Debit Cash $5,000

Credit Common stock $5,000

(Recognize common stock issuance)

Debit Equipment $1,100

Credit Accounts payable $1,100

(Purchase of equipment on account)

Debit Rent expense $740

Credit Cash $740

(June rent payment)

Debit Accounts receivable $700

Credit Service revenue  $700

(Welding work for Will Wheaton)