The following transactions occur for the Panther Detective Agency during the month of July:
a. Purchase a truck and sign a note payable, $15,000.
b. Purchase office supplies for cash, $600.
c. Pay $800 in rent for the current month.
Required:
1. Record the transactions. The company uses the following accounts: Cash, Supplies, Equipment (for the truck), Notes Payable, and Rent Expense. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Panther Detective Agency

Journal Entries:

a) Debit Equipment Account $15,000

Credit Notes Payable $15,000

To record purchase of truck with a note.

b) Debit Supplies Account $600

Credit Cash Account $600

To record purchase of office supplies for cash.

c) Debit Rent Expense $800

Credit Cash Account $800

To record payment of rent for the current month.

Explanation:

a) The purchase of a truck increases the Equipment Account and the Notes Payable Account by $15,000.

b) Payment for office supplies reduces the Cash Account and increases the Supplies Account by $600.

c) The payment for rent for the current month increases the Rent Expense Account and reduces the Cash Account by $800.

d) The use of journal entries is to record business transactions as they occur.  It makes it easier to know which account will be credited and which to be debited in the Ledger.

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