Selected transactions for Front Room, an interior decorator corporation, in its first month of business, are as follows.

1. Issued stock to investors for $15,000 in cash.

2. Purchased used car for $10,000 cash for use in business.

3. Purchased supplies on account for $300.

4. Billed customers $3,700 for services performed.

5. Paid $200 cash for advertising at the start of the business.

6. Received $1,100 cash from customers billed in transaction (4).

7. Paid creditor $300 cash on account.

8. Paid dividends of $400 cash to stockholders.

Instructions

(a) For each transaction indicate

(a) the basic type of account debited and credited (asset, liability, stockholders' equity);

(b) the specific account debited and credited (Cash, Rent Expense, Service Revenue, etc.);

(c) whether the specific account is increased or decreased; and

(d) the normal balance of the specific account.

Use the following format, in which transaction (1) is given as an example.

(b) Journalize the transactions. Do not provide explanations.

Transcribed Image Text:

Account Debited Account Credited Normal Basic Specific Trans Basic Specific action Type Account Effect Balance Type Account Effect Balance Normal 1 Asset Cash Increase Debit Stock Common Increase Credit holders' Stock equity