Question

Elain's Inflatables earns service revenue by providing party planning services and inflatable playscapes. Elaine?'s Inflatables is organized as a sole proprietorship and owned by Elaine Gibson. During the past? month, Elaine?'s Inflatables has the following? transactions:a. Gibson contributed $10,000 to the business in exchange for capital.b. Purchased equipment for $5,000 on account.c. Paid $400 for office supplies.d. Earned and received $2,500 cash for service revenue.e. Paid $400 for wages to employees.f. Gibson withdrew $1,000 cash.g. Earned $1,000 for services provided. Customer has not yet paid.h. Paid $1,000 for rent.i. Received a bill for $250 for the monthly utilities. The bill has not yet been paid.

Answer 1

The accounting entry for each transaction is given below.

Gibson contributed $10,000 to the business in exchange for capital.

Debit Cash Asset $10,000

Credit Capital $10,000

b. Purchased equipment for $5,000 on account.

Debit equipment Asset $5,000

Credit Payable Liability $5,000

c. Paid $400 for office supplies.

Debit payable $400

Credit Cash Asset $400

d. Earned and received $2,500 cash for service revenue.

Debit Cash Asset $2,500

Credit Income $2,500

e. Paid $400 for wages to employees.

Debit Wages expense $400

Credit Cash Asset $400

f. Gibson withdrew $1,000 cash

Debit Capital $1,000

Credit Cash Asset $1,000

.g. Earned $1,000 for services provided. Customer has not yet paid.

Debit Receivable $1,000

Credit Service Income $1,000

h. Paid $1,000 for rent.

Debit Rent expense $1,000

Credit Cash Asset $1,000

i. Received a bill for $250 for the monthly utilities. The bill has not yet been paid.

Debit Utility expense $250

Credit payable $250