Purchased new equipment for $3,350 by issuing a check for $2,100 as a down payment with the balance due in 30 days. Returned damaged supplies and received a $105 cash refund. Purchased supplies for $310 on account. Provided services for $7,350 on credit. Issued a check for $920 to pay a creditor on account. Issued checks for $3,500 to pay the employees their monthly salaries. Issued a check for $320 to pay the monthly telephone bill. Determine the accounts and amounts to be debited and credited for the above transactions for Madison's Clock Repair.

All workings and explanations are in the explanation section.

Explanation:

Transaction 1:

Purchased new equipment for $3,350 by issuing a check for $2,100 as a down payment with the balance due in 30 days.

Debit: Fixed asset account - Equipment $3,350

Credit: Bank account $2,100

Credit: Current liabilities - $1,250

Explanation:

Equipment is a fixed asset, when an asset is increased, it is debited.Partial payment was made by bank- bank is a current asset, a decrease to the asset is a credit item. The remaining balance is current liability, since payable within 30 days, an increase in liability is a credit item.

Transaction 2:

Returned damaged supplies and received a $105 cash refund.

Debit: Cash - $105

Credit: Supplies - $105

Explanation:

Cash refund is an increase in cash - current assets, it is a debit itemSupplies are decreased, and supplies is also a current asset, a decrease in current assets is a credit item.

Transaction 3:

Purchased supplies for $310 on account.

Debit - supplies - $310

Credit - payables - $310

Explanation:

Supplies are current assets - an increase in supplies is a debit item.They are purchased on account means it is a current liability, therefore, an increase in liabilities is a credit item.

Transaction 4:

Provided services for $7,350 on credit.

Debit: Receivable - $7,350

Credit: Sales revenue - $7,350

Explanation:

Receivables are current assets - an increase in receivables is a debit item.Sales revenue is credit item, an increase in revenue is credit.

Transaction 5:

Issued a check for $920 to pay a creditor on account.

Debit - payables - $920

Credit - Bank -$920

Explanation:

A decrease in creditors is a debit itemA decrease in bank, is a credit item

Transaction 6:

Issued checks for $3,500 to pay the employees their monthly salaries.

Debit Wages - $3,500

Credit Bank - $3,500

Explanation:

Wages are an expense. An increase in the expense is a debit item.Bank is a current asset, a decrease in bank is a credit item.

Transaction 7:

Issued a check for $320 to pay the monthly telephone bill.

Debit - Utilities -$320

Credit - Bank - $320

Explanation:

Utilities are an expense. An increase in the expense is a debit item.Bank is a current asset, a decrease in bank is a credit item.

Entrepreneur is a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.