Question

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)

Answer 1

	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