Question

Hokies uses the following accounts:

Accounts Payable
Equipment
Supplies
Rent Expense
Notes Payable
Salaries
Expense
Accounts
Receivable
Utilities
Expense
Service
Revenue
Retained

Required:
Indicate which accounts should be debited and which should be credited for the following transactions of Hokies companies.

1. Pay a cash dividend.
2. Pay rent in advance for the next three months.
3. Provide services to customers on account.
4. Purchase office supplies on account.
5. Pay salaries for the current month.
6. Issue common stock in exchange for cash.
7. Collect cash from customers for services provided in (3) above.
8. Borrow cash from the bank and sign a note.
9. Pay for the current month's utilities.
10. Pay for office supplies purchased in (4) above.

Answer 1

Transaction Account Debited Account Credited

1. Pay a cash dividend. Dividends Cash

2. Pay rent in advance for the next Prepaid Rent Cash

three months.

3. Provide services to customers Accounts Receivables Service revenue

on account.

4. Purchase office supplies on Supplies Accounts receivables

account.

5. Pay salaries for the current Salaries Account Payables

month.

6. Issue common stock in Cash Common stock

exchange for cash.

7. Collect cash from customers for Cash Account Receivables

services provided in (3) above.

8. Borrow cash from the bank Cash Notes payable

and sign a note.

9. Pay for the current month's utilities. Utilities Cash

10. Pay for office supplies purchased Account payables Cash

in (4) above.