1. Selected transactions for L. Takemoto, an interior decorating firm, in its first month of business, are shown below and on page 86.

Jan. 2 Invested $15,000 cash in the business in exchange for common stock.

3 Purchased used car for $8,200 cash for use in the business.

9 Purchased supplies on account for $500.

11 Billed customers $1,800 for services performed.

Jan. 16 Paid $200 cash for advertising.

20 Received $780 cash from customers billed on January 11.

23 Paid creditor $300 cash on the balance owed.

28 Declared and paid a $500 cash dividend.

Instructions

For each transaction indicate the following.

(a) The basic type of account debited and credited (asset, liability, stockholders’ equity).

(b) The specific account debited and credited (Cash, Rent Expense, Service Revenue, etc.).

(c) Whether the specific account is increased or decreased.

(d) The normal balance of the specific account.

Use the following format, in which the January 2 transaction is given as an example.

 

2. Presented below is information related to Lexington Real Estate Agency.
Oct. 1 Diane Lexington begins business as a real estate agent with a cash investment of $20,000 in exchange for common stock.
2 Hires an administrative assistant.
3 Purchases office furniture for $2,300, on the account.
6 Sells a house and lot for N. Fennig; bills N. Fennig $3,600 for realty services performed.
27 Pays $850 on the balance related to the transaction of October 3.
30 Pays the administrative assistant $2,500 in salary for October.

Instructions
Prepare the debit-credit analysis for each transaction as illustrated on pages 69–73.n 

Transcribed Image Text:

Account Debited Account Credited (b) Specific Account Effect Balance (a) (b) (c) (d) (а) (c) (d) Basic Specific Normal Basic Normal Date Type Account Effect Balance Туре Jan. 2 Asset Cash Increase Debit Stockholders' Common Increase Credit Equity Stock Account Debited Account Credited (b) Specific Account Effect Balance (a) (b) (c) (d) (а) (c) (d) Basic Specific Normal Basic Normal Date Type Account Effect Balance Туре Jan. 2 Asset Cash Increase Debit Stockholders' Common Increase Credit Equity Stock

Answer rating: 100% (QA)

E22 Answer E24 Answer Assumption In Absence of Specific Requirement Journal Entries are Passed for transactions Journal Entries in Books of Lexington ... View the full answer