- Gardens Plus uses the listed accounts. The T accounts have been prepared for you. Analyze each transaction into its debit and credit parts. Enter the debit and credit amounts in the proper T accounts to show how each transaction changes account balances. Enter the date of the transactions before each amount. (Hint: You must enter the transactions in the order in which they are listed.) 1. 2-M MASTERY PROBLEM (LO4, 5), pp. 53-54 (STATIC) QUESTION ASSETS Gardens Plus uses the listed accounts. The T accounts have been prepared for you. Analyze each transaction into its debit and credit parts. Enter the debit and credit amounts in the proper T accounts to show how each transaction changes account balances. Enter the date of the transactions before each amount. (Hint: You must enter the transactions in the order in which they are listed.) Gardens Plus uses the listed accounts. The T accounts have been prepared for you. Analyze each transaction into its debit and credit parts. Enter the debit and credit amounts in the proper T accounts to show how each transaction changes account balances. Enter the date of the transactions before each amount. (Hint: You must enter the transactions in the order in which they are listed.) Accounts Payable-Sullivan Supplies May Sadie Dirks, Drawing Advertising Expense May Miscellaneous Expense May Rent Expense May Repair Expense Utilities Expense
The Correct Answer and Explanation is :
To analyze the transactions for Gardens Plus and record them in the appropriate T accounts, we will follow the double-entry accounting system, where each transaction affects at least two accounts—one debit and one credit. Below is a step-by-step breakdown of each transaction, including the date, the accounts involved, and the corresponding debit and credit entries.
Transaction 1: May 1
- Received cash from owner as an investment, $3,700.00.
- Debit: Cash $3,700.00
- Credit: Simon Dirks, Capital $3,700.00
Transaction 2: May 2
- Paid cash for rent, $600.00.
- Debit: Rent Expense $600.00
- Credit: Cash $600.00
Transaction 3: May 4
- Paid cash for supplies, $400.00.
- Debit: Supplies $400.00
- Credit: Cash $400.00
Transaction 4: May 4
- Received cash from sales, $950.00.
- Debit: Cash $950.00
- Credit: Sales $950.00
Transaction 5: May 5
- Paid cash for insurance, $375.00.
- Debit: Prepaid Insurance $375.00
- Credit: Cash $375.00
Transaction 6: May 8
- Sold services on account to Lee Chen, $800.00.
- Debit: Accounts Receivable-Lee Chen $800.00
- Credit: Sales $800.00
Transaction 7: May 9
- Bought supplies on account from Bellville Supplies, $300.00.
- Debit: Supplies $300.00
- Credit: Accounts Payable-Bellville Supplies $300.00
Transaction 8: May 10
- Paid cash for repairs, $85.00.
- Debit: Repair Expense $85.00
- Credit: Cash $85.00
Transaction 9: May 11
- Received cash from owner as an investment, $2,900.00.
- Debit: Cash $2,900.00
- Credit: Simon Dirks, Capital $2,900.00
Transaction 10: May 11
- Received cash from sales, $1,000.00.
- Debit: Cash $1,000.00
- Credit: Sales $1,000.00
Transaction 11: May 12
- Bought supplies on account from West End Supplies, $230.00.
- Debit: Supplies $230.00
- Credit: Accounts Payable-West End Supplies $230.00
Transaction 12: May 13
- Received cash on account from Lee Chen, $650.00.
- Debit: Cash $650.00
- Credit: Accounts Receivable-Lee Chen $650.00
Transaction 13: May 15
- Paid cash for miscellaneous expense, $35.00.
- Debit: Miscellaneous Expense $35.00
- Credit: Cash $35.00
Transaction 14: May 16
- Paid cash on account to Bellville Supplies, $60.00.
- Debit: Accounts Payable-Bellville Supplies $60.00
- Credit: Cash $60.00
Transaction 15: May 22
- Paid cash for electric bill (utilities expense), $65.00.
- Debit: Utilities Expense $65.00
- Credit: Cash $65.00
Transaction 16: May 23
- Paid cash for advertising, $105.00.
- Debit: Advertising Expense $105.00
- Credit: Cash $105.00
Transaction 17: May 25
- Sold services on account to Parker McCure, $550.00.
- Debit: Accounts Receivable-Parker McCure $550.00
- Credit: Sales $550.00
Transaction 18: May 26
- Paid cash to owner for personal use, $500.00.
- Debit: Simon Dirks, Drawing $500.00
- Credit: Cash $500.00
Transaction 19: May 30
- Received cash on account from Parker McCure, $300.00.
- Debit: Cash $300.00
- Credit: Accounts Receivable-Parker McCure $300.00
Explanation:
In double-entry accounting, every transaction affects at least two accounts: one is debited, and the other is credited. The debit entry represents an increase in assets or expenses or a decrease in liabilities or equity, while the credit entry represents a decrease in assets or expenses or an increase in liabilities or equity.
For example, when Gardens Plus receives cash from the owner as an investment, the Cash account (an asset) is debited, indicating an increase in cash, and the Simon Dirks, Capital account (equity) is credited, reflecting the owner’s investment in the business. Similarly, when the company pays cash for rent, the Rent Expense account (an expense) is debited, and the Cash account is credited, showing a decrease in cash due to the payment.
By systematically recording each transaction in the appropriate T accounts, we can track the financial position of Gardens Plus and ensure that the accounting equation (Assets = Liabilities + Equity) remains balanced.