You are presented with the following transactions for J. Green, a sole proprietorship established in the month of August:

Aug. 2 The owner, Jason Green, invested $35,000 in the business.

2 Purchased supplies on account for $550.

5 Purchased equipment for $10,000 by signing a note payable due in three months.

9 Earned service revenue of $15,000. Of this amount, $7,500 was received in cash. The balance was on account.

14 Paid salaries of $1,200.

15 Paid Jason Green $4,300 for his use.

19 A customer paid $2,450 in advance for services to be provided next month.

22 Paid the balance owing for the supplies purchased on August 2.

25 Collected the $7,500 of the amount owing from the August 9 transaction.

26 Paid office expense of $3,200.

30 Paid interest of $50 on the note payable signed on August 5.

Instructions

Journalize the August transactions.

TAKING IT FURTHER

Jason Green does not understand why service revenue and salaries expense are considered equity accounts. Explain why they are considered equity accounts. Include in your explanation the debit and credit conventions.