Question

B. Indicate whether the normal balance of the given account is a debit or a credit and whether the increase or

decrease in such account should be a debit or a credit. Check the appropriate box.

Normal Balance

Effect in the Account

Particulars

Debit

Credit

Debit

Credit

1. Equipment was sold for P 350,000.00

2. Notes Recievable was collected in full

3. Loans Payable in bank was paid in full

4. Office furnishings was acquired for

P 35,000.00

5. Insurance in premium for one year was

paid in November

Answer 1

given below

Explanation:

1. Equipment is credited and cash is debited.

2. Notes receivable is credited and cash is debited

3. Loan Payable is debited and cash account is credited

4.Office furnishings are debited and cash is credited.

5. Insurance in premium is debited and cash is credited.

Summary

1) addition to an asset account is a debit

2) subtraction from an asset account is a credit

3) addition to a liability account is a credit

4) subtraction from a liability account is a debit

5) Bank account is credited when cash is added to it and debited when cash is withdrawn from it

Normal Balance Effect in the Account Debit Credit

1) Equipment 350,000.00 decrease in asset Cash Equipment

2. Notes Recievable Cash N/R

3. Loans Payable Dec. Accounts /Rec Loans Payable Cash

4. Office furnishings 35,000.00 Office furnishings Cash

5. Insurance in premium (+aasets) Insurance in premium Cash

2. There was increase in cash and decrease in notes receivable.