Question

Terapin Company engages in the following external transactions for November.

1. Purchase equipment in exchange for cash of $21,300.
2. Provide services to customers and receive cash of $6,100.
3. Pay the current month's rent of $900.
4. Purchase office supplies on account for $1,500.
5. Pay employees' salaries of $1,300 for the current month.


Required:
Record the transactions. Terapin uses the following accounts: Cash, Supplies, Equipment, Accounts Payable, Service Revenue, Rent Expense, and Salaries Expense. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

Answer 1

Answer and Explanation:

The journal entries are shown below:

1. Equipment Dr $21,300

To cash $21,300

(Being the equipment is purchased for cash)

For recording this we debited the equipment as it increased the assets and credited the cash as it reduced the assets

2. Cash Dr $6,100

To Service revenue $6,100

(Being the cash received is recorded)

For recording this we debited the cash as it increased the assets and credited the service revenue as it increased the revenue

3. Rent expense $900

To Cash $900

(Being the rent is paid)

For recording this we debited the rent expense as it increased the expenses and credited the cash as it reduced the assets

4. Office supplies Dr

To Account payable

(Being the office supplies purchased on account)

For recording this we debited the office supplies as it increased the assets and credited the account payable as it increased the liabilities

5. Salaries expense

To cash

(Being the salaries paid is recorded)

For recording this we debited the salaries expense as it increased the expenses and credited the cash as it reduced the assets