Exercise 2-2

Selected transactions for D. Reyes, an interior decorating firm, in its first month of business,are as follows.

Jan. 2 Invested $10,000 cash in the business in exchange for ordinary shares.

       3 Purchased used car for $4,000 cash for use in the business.

       9 Purchased supplies on account for $500.

       11 Billed customers $1,800 for services performed.

       16 Paid $200 cash for advertising.

       20 Received $700 cash from customers billed on January 11.

       23 Paid creditor $300 cash on balance owed.

       28 Declared and paid a $1,000 cash dividend.

Instructions

For each transaction indicate the following.

(a) The basic type of account debited and credited (asset, liability, equity).

(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).

(c) Whether the specific account is increased or decreased.

(d) The normal balance of the specific account.

Use the following format, in which the January 2 transaction is given as an example.

Exercise 2-3

Data for D. Reyes, interior decorating, are presented in E2-2.

Instructions

Journalize the transactions using journal page J1. (You may omit explanations.)

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