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Indicate for each of the following accounts whether the normal balance is a debit or a credit

a. Accounts Receivable
b. Accounts Payable
c. Dividends
d. Wage Expense
e. Inventory
f. Interest Income
g. Retained Earnings

1 Answer

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Final answer:

Accounts Receivable - debit, Accounts Payable - credit, Dividends - debit, Wage Expense - debit, Inventory - debit, Interest Income - credit, Retained Earnings - credit

Step-by-step explanation:

a. Accounts Receivable - Normal balance is a debit. Accounts receivable represents amounts owed to a business by its customers, which is an asset. A debit entry increases accounts receivable.

b. Accounts Payable - Normal balance is a credit. Accounts payable represents amounts owed by a business to its suppliers or creditors, which is a liability. A credit entry increases accounts payable.

c. Dividends - Normal balance is a debit. Dividends are distributions of a company's profits to its shareholders, which is a reduction in retained earnings. A debit entry decreases retained earnings.

d. Wage Expense - Normal balance is a debit. Wage expense represents the cost of wages paid to employees, which is an expense. A debit entry increases wage expense.

e. Inventory - Normal balance is a debit. Inventory represents goods that a company owns and intends to sell, which is an asset. A debit entry increases inventory.

f. Interest Income - Normal balance is a credit. Interest income represents the money earned from interest on loans or investments, which is revenue. A credit entry increases interest income.

g. Retained Earnings - Normal balance is a credit. Retained earnings represents the accumulated profits of a company that are reinvested in the business, which is part of shareholders' equity. A credit entry increases retained earnings.

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