Cash Organization Costs [expenses) Notes Receivable Accounts Payable Merchandise Inventory Notes Payable Supplies Inventory Rent Received in Advance Prepaid Insurance Owners' Equity Machinery and Equipment Transaction Account Debited Account Credited Example: Bought inventory for cash C i. Paid the lawyers in cash for the legal work performed in organizing the company. ii. Loaned money to an employee, and received a 90-day note from the employee as recognition of the debt. iii. A 120-day note was given to the bank for a loan. iv. Acquired supplies for cash. V. Purchased merchandise on account. vi. Purchased for cash a one-year insurance policy for $300. vii. Received a one-year advance from tenants for rental property- vili. Owners invested $20,000 cash in the company. ix. Machinery and equipment were bought on account. X. Paid off the creditors for inventory purchases