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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following is the correct journal entry to record the purchase of equipment for $10,000 in cash on December 31?

Debit Equipment $10,000; Credit Accounts Payable $10,000

Debit Equipment $10,000; Credit Cash $10,000

Debit Supplies $10,000; Credit Cash $10,000

Debit Cash $10,000; Credit Equipment $10,000

Previous problemNext problem

Verified step by step guidance

Step 1: Understand the nature of the transaction. The purchase of equipment for $10,000 in cash means that the company is acquiring a long-term asset (equipment) and paying for it immediately using cash.

Step 2: Identify the accounts involved. The accounts affected are 'Equipment' (an asset account) and 'Cash' (another asset account). Equipment increases, while Cash decreases.

Step 3: Determine the type of entry for each account. Since Equipment is increasing, it will be debited. Cash is decreasing, so it will be credited.

Step 4: Write the journal entry. The format for a journal entry is: Debit the account that increases and Credit the account that decreases. In this case, Debit Equipment $10,000 and Credit Cash $10,000.

Step 5: Verify the entry. Ensure that the debit and credit amounts are equal ($10,000 each) and that the accounts used correctly reflect the transaction (Equipment for the asset acquired and Cash for the payment made).