ND Paint Designs began operations on April 1, 2021. The company completed the following transactions in its first month:

Instructions

a. For each transaction, indicate: (1) the basic type of account debited and credited (asset, liability, or owner?s equity); (2) the specific account debited and credited (Cash, Rent Expense, Service Revenue, etc.); and (3) whether each account is increased (+) or decreased (?), and by what amount. Use the following format, in which the first transaction is given as an example:

b. Prepare a journal entry for each transaction.

Taking it further

Nazim doesn?t understand why a debit increases the cash account and yet a credit to N. Dhaliwal, Capital increases that account. He reasons that debits and credits cannot both increase account balances. Explain to Nazim why he is wrong.

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The owner, Nazim Dhaliwal, invested $12,800 cash in the company. Purchased equipment for $5,000 on account. Purchased a one-year insurance policy effective April 1, and paid the annual premium of Apr. 1 $1,500. Purchased $590 of supplies for cash. 7 Paid cash for $600 of advertising expenses. Finished a painting project for Maya Angelina and collected $630 cash. Received a $1,270 contract from a customer, SUB Terrain Inc., to paint its new office space. SUB Terrain will pay when the project is complete. The owner, Nazim Dhaliwal, withdrew $960 cash for his use. Completed the contract with SUB Terrain Inc. from April 10 and collected the amount owing. Received $1,800 cash from Memphis Shek for a painting project that ND Paint Designs will start on May 5. Paid for the equipment purchased on account on April 2. 10 25 28 29 30 Account Debited 1. 2. Basic Specific Type Account Account Credited 2. Specific Account 3. 1. 3. Basic Transaction Effect Effect Type Apr. 1 +$12,800 Owner's N. Dhaliwal, +$12,800 Asset Cash Equity Capital