Question

Some of the ledger accounts for the Sanderson Hardware Company are numbered and listed below. For each of the October 2011 transactions numbered 1 through 12 below, indicate by account number which accounts should be debited and which should be credited. The company uses the perpetual inventory system. Assume that appropriate adjusting entries were made at the end of September.

Accounts payable Equipment Inventory

Accounts receivable Cash Supplies

Supplies expense Prepaid rent Sales revenue

Retained earnings Note payable Common stock

Unearned revenue Rent expense Wages payable

Cost of goods sold Wage expense Interest expense

Example: Account debited Accound credited



Purchased inventory for cash > >> inventory cash



1. Paid a cash dividend.

2. Paid rent for the next three months.

3. Sold goods to customers on account.

4. Purchased inventory on account.

5. Purchased supplies for cash.

6. Paid employees wages for September.

7. Issued common stock in exchange for cash.

8. Collected cash from customers for goods sold in 3.

9. Borrowed cash from a bank and signed a note.

10. At the end of October, recorded the amount of supplies

that had been used during the month.

11. Received cash for advance payment from customer.

12. Accrued employee wages for October.

Answer 1

Answer: 1Credit 2Credit 3Credit 4Debit 5Debit 6Credit 7Debit 8Debit 9Debit 10Debit 11Debit 12Debit

Step-by-step explanation:

1 Due to divident is an obligation payable the nature of the transaction is to decrease the amount so you will have a credit in cash for the money that you will pay. 2 Prepaid rent is rent paid prior to the rental period to which it relates, so you have to register the prepaid asset and the cash that you will pay. You will have a credit in cash for this payment. Remind that during the month to which the rent payment actually applies you have to charges the payment to expense. 3Nature of Sells are credits, as you will have the sell of goods and an accounts receivable (debit). 4 Inventory is an Asset so the nature is debit, as a result of the transaction you will have an accounts payable (credit). 5 Supplies are Asset so the nature is debit, as a result of the trasaction you will have a money outflow. 6 Payment to employees are liabilities so the nature is credit as you have a money outflow. 7 As you will receive money for the issue of stock, the nature is debit. 8 The collection of cash will generate a money inflow so is debit. 9 For the loan you will obtain cash you is debit for the money inflow and credit for the loan. 10 The supplies used will be an expense so the nature is debit. 11 For the advacen payment you will have a money inflow so is debit. 12 The accrued employee wages are expenses so the nature is debit.