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Transaction Analysis
e4A. Analyze transactions a–g, using the example that follows.
a. Melissa Faubert established Faubert’s Beauty Parlor, Inc., by incorporating and investing $2,400 in exchange for 240 shares of $10 par value common stock.
b. Paid two months’ rent in advance, $1,680.
c. Purchased supplies on credit, $120.
d. Received cash for salon services, $600.
e. Paid for supplies purchased in c.
f. Paid utility bill, $72.
g. Declared and paid a dividend of $90.
Example
a. The asset account Cash was increased. Increases in assets are recorded by debits. Debit Cash $2,400. A component of stockholders’ equity, Common Stock, was increased. Increases in Common Stock are recorded by credits. Credit Common Stock $2,400.
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