Question

During the year, the Fletcher Company experienced the following accounting transactions:

1. Purchased equipment with cash in the amount of $130,000.
2. Purchased supplies on account in the amount of $16,500.
3. Collected $37,000 cash from customers.
4. Paid a cash dividend of $17,000.

Using the accounting equation, record each of the transactions.

Answer 1

Answer:

Transaction 1

Debit  : Equipment  $130,000

Credit : Cash $130,000

Transaction 2

Debit  : Supplies $16,500

Credit : Account Payable $16,500

Transaction 3

Debit  : Cash $37,000

Credit : Account Receivable  $37,000

Transaction 4

Debit  : Dividend  $17,000

Credit : Cash $17,000

Explanation:

The first step to record transactions is to identify two or more accounts affected by the transaction.

After that determine if the assets, liability or equity of the accounts identified are increasing or decreasing.

Assets increase on the debit side and decrease on the credit side. The opposite applies to liability and equity.