Question

Journalize the entries that should be made by the company that (a) increase cash and (b) decrease cash?

Answer 1

To increase cash, the company can journalize entries by debiting cash and crediting relevant accounts. Examples include debiting cash and crediting loans receivable for loan transactions. To decrease cash, the company can make entries by debiting cash and crediting relevant accounts, such as accounts payable for payments to suppliers or expense accounts for other expenses.

Step-by-step explanation:

To journalize the entries that increase cash, we need to consider the transactions related to the loan made by the Singleton Bank to Hank's Auto Supply. The entries are as follows:

1. Debit Cash (increase) and credit Loans Receivable (increase) for $9 million, representing the loan made by Singleton Bank to Hank's Auto Supply.
2. Debit Interest Income (increase) and credit Interest Receivable (increase) for the interest income expected from the loan.

To journalize the entries that decrease cash, we need to consider any expenses, withdrawals, or payments made by the company. Without specific information, it is not possible to provide a specific entry for decreasing cash. However, typical examples include:

• Debit Cash (decrease) and credit Accounts Payable (increase) for payments made to suppliers.
• Debit Cash (decrease) and credit Expense accounts (increase) for any other expenses incurred.