Question

In: Accounting

Name 5 accounts with NORMAL BALANCE on the Debit side Name 5 Accounts with NORMAL BALANCE...

Name 5 accounts with NORMAL BALANCE on the Debit side

Name 5 Accounts with NORMAL BALANCE on the Credit side

Use two accounts in a journal entry to illustrate with explanations.

For example, normal balance of Cash account is Debit and normal balance of Loan Payable is Credit.

ABC Company borrowed from Bank of America $50,000. After ABC Company signs a Promissory Note, Bank of America would give $50,000 cash to ABC Company.

ABC Company would enter Journal Entry in its books as follow:

Debit Cash (To Increase Cash) and Credit Loan Payable (From not owing, now ABC owes $50,000. So it needs to Increase Loan Payable)

Solutions

Expert Solution

Normal Debit Balance Normal Credit Balance
1 Machinery Notes Payable
ABC Company bought a Machinery from PQR Company and issued a 9% Note of $100,000
So ABC company has to debit Machinery by $100,000 and Credit 9% Notes Payable
2 Merchandise Inventory Accounts Payable
ABC Company bought Materials from PQR company on credit, it means that ABC has to debit
Merchandise Inventory and credit Accounts Payable.
3 Accounts Receivable Sales
ABC company sold goods to DEF company woth $10,000 on account. SO ABC company has to create
Accounts Receivable account of $10,000 and credit sales account to recognize sales Revenue
4 Cash Common Stock
ABC company issued common shares 5,000 stock at par value of $10. So ABC company will receive
an amount of $50,000 cash which will be debited and credit Common Stock which shows that the company
has issued shares of $50,000
5 Cash Bonds Payable
ABC company issued 5% Bonds worth $500,000. So ABC company will receive
an amount of $500,000 cash which will be debited and credit Bonds Payable which shows that the company
has issued Bonds worth $500,000

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