Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Which of the following journal entries correctly records Jayne Company's purchase of office supplies on account for $1,200 during the month of June?

Debit Office Supplies $1,200; Credit Accounts Payable $1,200

Debit Office Supplies $1,200; Credit Cash $1,200

Debit Accounts Payable $1,200; Credit Office Supplies $1,200

Debit Cash $1,200; Credit Office Supplies $1,200

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Verified step by step guidance

Step 1: Understand the transaction. Jayne Company is purchasing office supplies on account, meaning they are not paying cash immediately but instead creating a liability (Accounts Payable).

Step 2: Identify the accounts involved. The accounts affected are 'Office Supplies' (an asset account) and 'Accounts Payable' (a liability account).

Step 3: Determine the nature of the accounts. 'Office Supplies' will increase because the company is acquiring supplies, and 'Accounts Payable' will increase because the company owes money for the purchase.

Step 4: Apply the rules of debits and credits. Assets increase with a debit, so 'Office Supplies' will be debited. Liabilities increase with a credit, so 'Accounts Payable' will be credited.

Step 5: Write the journal entry. The correct journal entry is: Debit Office Supplies $1,200; Credit Accounts Payable $1,200. This reflects the increase in assets and liabilities due to the purchase on account.