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

DLW Corporation acquired and placed in service the following assets during the year: equipment for $50,000 (paid in cash) and office furniture for $10,000 (on account). Which of the following is the correct journal entry to record these acquisitions?

Debit Equipment $50,000; Credit Cash $50,000; Credit Office Furniture $10,000

Debit Equipment $50,000; Debit Office Furniture $10,000; Credit Cash $50,000; Credit Accounts Payable $10,000

Debit Equipment $60,000; Credit Cash $60,000

Debit Equipment $50,000; Debit Office Furniture $10,000; Credit Cash $60,000

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Verified step by step guidance

Step 1: Understand the nature of the transactions. DLW Corporation acquired equipment for $50,000 paid in cash and office furniture for $10,000 on account. This means the equipment purchase affects cash, while the office furniture purchase affects accounts payable.

Step 2: Identify the accounts involved. For the equipment purchase, the accounts are 'Equipment' (an asset account) and 'Cash' (an asset account). For the office furniture purchase, the accounts are 'Office Furniture' (an asset account) and 'Accounts Payable' (a liability account).

Step 3: Determine the type of entry for each account. The acquisition of assets increases the asset accounts, so 'Equipment' and 'Office Furniture' will be debited. The payment in cash decreases the 'Cash' account, so it will be credited. The purchase on account increases 'Accounts Payable,' so it will be credited.

Step 4: Construct the journal entry. Combine the debits and credits for the transactions: Debit 'Equipment' for $50,000, Debit 'Office Furniture' for $10,000, Credit 'Cash' for $50,000, and Credit 'Accounts Payable' for $10,000.

Step 5: Verify the journal entry. Ensure that the total debits equal the total credits ($50,000 + $10,000 = $60,000 for debits, and $50,000 + $10,000 = $60,000 for credits). This confirms the journal entry is balanced and correct.