The business was started on April 1st.
I have the following events that happened: what accounts should I debit and credit?
1. Incurred advertising expense of $1,907 on account.
2. Hired park manager at a salary of $3,783 per month, effective May 1.
3. Sold 140 coupon books for $50 each. Each book contains 10 coupons that entitle the holder to one admission to the park.
4. Paid $755 on balance owed for advertising incurred on April 8.
Hopefully that is enough information
To determine the accounts to debit and credit for each event, we need to consider the fundamental accounting equation: Assets = Liabilities + Equity.
Based on the information provided, let's examine each event:
Event 1: Incurred advertising expense of $1,907 on account.
- Debit: Advertising Expense (an expense account)
- Credit: Accounts Payable (a liability account)
Explanation: When the business incurs an expense on account, we debit the corresponding expense account (Advertising Expense) to recognize the cost. At the same time, we credit the liability account (Accounts Payable) to acknowledge that the business owes the amount for advertising.
Event 2: Hired park manager at a salary of $3,783 per month, effective May 1.
- Debit: Salary Expense (an expense account)
- Credit: Accrued Salaries Payable (a liability account)
Explanation: Since the salary is to be paid at a later date, we need to accrue for it. Therefore, we debit Salary Expense to recognize the expense and credit Accrued Salaries Payable to acknowledge the company's liability to pay the salary.
Event 3: Sold 140 coupon books for $50 each. Each book contains 10 coupons that entitle the holder to one admission to the park.
- Debit: Accounts Receivable (an asset account)
- Credit: Revenue from Coupon Books (a revenue account)
Explanation: Since the business made a sale on account, we debit Accounts Receivable to represent the amount owed by the customer. At the same time, we credit Revenue from Coupon Books to recognize the income generated from the sale.
Event 4: Paid $755 on balance owed for advertising incurred on April 8.
- Debit: Accounts Payable (a liability account)
- Credit: Cash (an asset account)
Explanation: Payment of a liability entails reducing the amount owed. Therefore, we debit Accounts Payable to reduce the liability and credit Cash to represent the payment made.
Remember, these are general guidelines and may not fully align with your specific business needs. It's always important to consult with an accounting professional or refer to the specific accounting policies and guidelines of your company.