How the heck to I post this?
"Wells purchased 100 shares of Wells Consulting Services stock for $10,000"
The only accounts I have to choose from are:
Cash
A/R
Supplies
A/P
Capital Stock
Retained Earnings
Dividends
Professional Fees
Operating Expense
Supplies Expense
To post the transaction "Wells purchased 100 shares of Wells Consulting Services stock for $10,000" into the appropriate accounts, you need to follow these steps:
1. Identify the accounts involved: In this case, the accounts involved are Cash (since the stock was purchased for cash) and Capital Stock (since the stock represents ownership in the company).
2. Determine the effect of the transaction on each account:
- Cash: The transaction decreases Cash because money is being paid out.
- Capital Stock: The transaction increases Capital Stock because new shares are being issued.
3. Post the transaction:
- Debit the Cash account: Since the transaction decreases Cash, you would record a debit to the Cash account. The amount would be $10,000.
- Credit the Capital Stock account: Since the transaction increases Capital Stock, you would record a credit to the Capital Stock account. The amount would be $10,000.
Therefore, the journal entry to record the transaction would be as follows:
Debit: Cash $10,000
Credit: Capital Stock $10,000
Remember, these instructions may vary depending on the accounting method being used and any additional information related to the transaction. If you are unsure about the specific accounting treatment, it is recommended to consult with a professional accountant or refer to accounting guidelines and standards.