On January 1, Merry Walker and other stockholders established a catering service. Listed below are accounts to use for transactions (a) through (f), each identified by a number. Following this list are the transactions that occurred in Walker’s first month of operations. You are to indicate for each transaction the accounts that should be debited and credited by placing the account number(s) in the appropriate box.1. Cash2. Accounts Receivable3. Supplies4. Prepaid Insurance5. Equipment6. Truck7. Notes Payable8. Accounts Payable9. Common Stock10.Dividends11.Fees Earned12.Wages Expense13.Rent Expense14.Utilities Expense15.Truck Expense16.Miscellaneous Expense17.Insurance Expense TransactionsAccount(s) DebitedAccount(s) Crediteda. Recorded jobs completed on account and sent invoices to customers. b. Received an invoice for truck expenses to be paid in February. c. Paid utilities expense d. Received cash from customers on account. e. Paid employee wages. f. Paid dividends to stockholders. What will be an ideal response?

Answer with Explanation:

Part A. Recorded jobs completed on account and sent Invoices to customers

The entry would include the recognition of revenue earned and thus this would be increase in Fees Earned account which will be credited. The amount is yet not paid which means that the Accounts Receivable account will be debited with an equal amount.

Dr Accounts receivable a/c

Cr                     Fees Earned a/c

Part B. Received an invoice for truck expense to be paid in February

The truck expense would related to repair and maintenance of truck which is on credit. This would be recorded as increase in Truck expenses a/c which would be debited and increase in Accounts payables a/c which must be credited.

Dr Truck expense a/c

Cr              Accounts payable a/c

Part C. Paid utilities expense.

The entry would be increase an increase in the utility expense account which would be debited and the cash paid would be credited because there is a decrease in cash due to payment.

Dr Utilities a/c

Cr         Cash a/c

Part D. Received cash from customers on account.

The receipt of cash asset is increase in asset and must be debited and the accounts receivables must credited because the debt paid to the customer has be decreased.

Dr Cash a/c

Cr  Accounts Receivable a/c

Part E. Paid employee wages.

The wages paid is an expense and thus wage expense account must be debited. The wages are paid in cash which means there is a decrease in cash asset which must be credited.

Dr Wages Expense a/c

Cr                        Cash  a/c

Part F. Paid dividends to stockholders.

The dividends are paid out of retained earnings and are debit in nature so this means that it is an increase in dividends which must be debited. On the other hand, decrease in cash must be credited.

Dr Dividends a/c

Cr             Cash a/c

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