write journal for any two imaginary transaction...
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Answer:
The transactions in this lesson pertain to Gray Electronic Repair Services, our imaginary small sole proprietorship business.
For account titles, we will be using the chart of accounts presented in an earlier lesson.
All transactions are assumed and simplified for illustration purposes.
Note: We will also be using this set of transactions and journal entries in later lessons when we discuss the other steps of the accounting process.
Let's start.
Transaction #1: On December 1, 2019, Mr. Donald Gray started Gray Electronic Repair Services by investing $10,000. The journal entry should increase the company's Cash, and increase (establish) the capital account of Mr. Gray; hence:
Date
2019 Particulars Debit Credit
Dec 1 Cash 10,000.00
Mr. Gray, Capital 10,000.00
Transaction #2: On December 5, Gray Electronic Repair Services paid registration and licensing fees for the business, $370.
First, we will debit the expense (to increase an expense, you debit it); and then, credit Cash to record the decrease in cash as a result of the payment.
5 Taxes and Licenses 370.00
Cash 370.00
Transaction #3: On December 6, the company acquired tables, chairs, shelves, and other fixtures for a total of $3,000. The entire amount was paid in cash.
There is an increase in an asset account (Furniture and Fixtures) in exchange for a decrease in another asset (Cash).
6 Furniture and Fixtures 3,000.00
Cash 3,000.00
Transaction #4: On December 7, the company acquired service equipment for $16,000. The company paid a 50% down payment and the balance will be paid after 60 days.
This will result in a compound journal entry. There is an increase in an asset account (debit Service Equipment, $16,000), a decrease in another asset (credit Cash, $8,000, the amount paid), and an increase in a liability account (credit Accounts Payable, $8,000, the balance to be paid after 60 days).