1. Explanation Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities. Credit , all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. Journal entries of Company N are as follows: (a) Buildings and equipment purchased on account and in cash: Date Accounts title and explanation Ref. Debit ($) Credit ($) Buildings (+A) 172 Equipment (+A) 270 Cash (-A) 432 Notes payable (+L) 10 (To record purchase of buildings and equipment on account and in cash) Table (1) Building is an assets account and it increased the value of asset by $172. Hence, debit the building account for $172. Equipment is an assets account and it increased the value of asset by $270. Hence, debit the equipment account for $270. Cash is an assets account and it decreased the value of asset by $432. Hence, credit the cash account for $432. Notes payable is a liability account, and it increased the value of liabilities by $10. Hence, credit the notes payable for $10. (b) Issuance of common stock: Date Accounts title and explanation Ref. Debit ($) Credit ($) Cash (+A) 345 Common stock (+SE) (1) 200 Additional paid-in capital (+SE) (2) 145 (To record the issuance of common stock) Table (2) Cash is an assets account and it increased the value of asset by $345. Hence, debit the cash account for $345. Common stock is a component of stockholder’s equity and it increased the value of stockholder’s equity by $200, Hence, credit the common stock for $200. Additional paid-in capital is a component of stockholder’s equity and it increased the value of stockholder’s equity by $145, Hence, credit the additional paid-in capital for $145... 2. To determine Explain the response for event (e).

8th Edition

ISBN: 9780078025556

Author: Robert Libby, Patricia Libby, Daniel Short

Publisher: McGraw-Hill Education

See similar textbooks

Question

Chapter 2, Problem 7E

To determine

Record the journal entries of Company N.

To determine

Explain the response for event (e).

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 2, Problem 6E

Chapter 2, Problem 8E

Students have asked these similar questions

A start-up company often engages in the following activities during its first year of operations. Classifyeach of the following activities into one of the three major activities of an organization.F. Financing I. Investing O. Operating Obtaining a bank loan

As a Finance Manager of the company you are required to: Requirement : 1 Calculate the following from the Balance Sheet: A Total fixed assets B Total long term liabilities C Total current assets D Total current liabilities E Shareholders’ funds F Capital employed

I need the answer as soon as possible

Chapter 2 Solutions

Financial Accounting, 8th Edition

Ch. 2 - Prob. 1Q Ch. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Prob. 3Q Ch. 2 - Why are accounting assumptions necessary?Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the fundamental accounting model?Ch. 2 - Prob. 7Q Ch. 2 - Explain what debit and credit mean.Ch. 2 - Prob. 9Q Ch. 2 - Prob. 10Q

Ch. 2 - Prob. 11Q Ch. 2 - Prob. 12Q Ch. 2 - How is the current ratio computed and interpreted?Ch. 2 - Prob. 14Q Ch. 2 - Prob. 1MCQ Ch. 2 - Which of the following is not an asset? a....Ch. 2 - Total liabilities on a balance sheet at the end of...Ch. 2 - The dual effects concept can best be described as...Ch. 2 - The T-account is a tool commonly used for...Ch. 2 - Prob. 6MCQ Ch. 2 - The Cash T-account has a beginning balance of...Ch. 2 - Prob. 8MCQ Ch. 2 - At the end of a recent year, The Gap, Inc.,...Ch. 2 - Prob. 10MCQ Ch. 2 - Prob. 1ME Ch. 2 - Matching Definitions with Terms Match each...Ch. 2 - Identifying Events as Accounting Transactions...Ch. 2 - Classifying Accounts on a Balance Sheet The...Ch. 2 - Prob. 5ME Ch. 2 - Prob. 6ME Ch. 2 - Prob. 7ME Ch. 2 - Prob. 8ME Ch. 2 - Prob. 9ME Ch. 2 - Prob. 10ME Ch. 2 - Prob. 11ME Ch. 2 - Prob. 12ME Ch. 2 - Prob. 13ME Ch. 2 - Prob. 1E Ch. 2 - Prob. 2E Ch. 2 - Prob. 3E Ch. 2 - Prob. 4E Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 6E Ch. 2 - Prob. 7E Ch. 2 - Analyzing the Effects of Transactions In...Ch. 2 - Prob. 9E Ch. 2 - Prob. 10E Ch. 2 - Prob. 11E Ch. 2 - Prob. 12E Ch. 2 - Prob. 13E Ch. 2 - Prob. 14E Ch. 2 - Prob. 15E Ch. 2 - Prob. 16E Ch. 2 - Inferring Typical Investing and Financing...Ch. 2 - Prob. 18E Ch. 2 - Prob. 19E Ch. 2 - Prob. 20E Ch. 2 - Identifying Accounts on a Classified Balance Sheet...Ch. 2 - Prob. 2P Ch. 2 - Prob. 3P Ch. 2 - Prob. 4P Ch. 2 - Prob. 5P Ch. 2 - Prob. 6P Ch. 2 - Prob. 1AP Ch. 2 - Prob. 2AP Ch. 2 - Prob. 3AP Ch. 2 - Prob. 4AP Ch. 2 - Prob. 1CP Ch. 2 - Prob. 2CP Ch. 2 - Prob. 3CP Ch. 2 - Prob. 4CP Ch. 2 - Prob. 5CP Ch. 2 - Prob. 6CP Ch. 2 - Prob. 7CP Ch. 2 - Prob. 8CP Ch. 2 - Prob. 1CC

Knowledge Booster

Record the journal entries of Company N.

Solution Summary: The author explains the rules for debiting and crediting different accounts while they occur in business transactions to abide by the double-entry system.

Record the journal entries of Company N.

Explain the response for event (e).

Want to see the full answer?

Chapter 2 Solutions