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Math / Money and accounting / Grade 7 / mb7j2

Two Sides of a Workshop Entry - Practice 2

Distinguish buying on account from paying a supplier, using fictional records.

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Debit is left; credit is right. Cash and Equipment are assets: debits increase them and credits decrease them. Accounts Payable is an amount owed to a supplier; Loan Payable is a loan obligation. These liabilities increase with credits and decrease with debits. Capital records an owner contribution with a credit. Equal debit and credit totals are required for each entry; an entry can involve more than two accounts.

Worked example

Separate example: an owner adds 60, equipment costs 20 cash, a loan brings in 15, then 5 of principal is repaid. Debit Cash for 60 and 15; credit Cash for 20 and 5. Cash ends at 50. Equipment 20 + Cash 50 = Loan Payable 10 + Capital 60. Receiving equipment before paying would credit Accounts Payable instead of Cash.

A separate Cash T-account lists left-side debits 60 and 15, right-side credits 20 and 5, and a 50 debit balance. The example balances 70 of assets against 10 of liabilities and 60 of capital.
The diagram is a separate worked example. Your supplier purchase has different amounts and timing.

A different workshop

Start with zero balances. K1: the owner contributes 80 cash. K2: equipment costing 25 arrives; payment to its supplier is due later. K3: pay that supplier 15 cash. K4: borrow 20 cash from a lender. All amounts are fictional dollars. Equipment stays an asset. Ignore interest, tax, depreciation and fees. There are no other transactions, sales or expenses.

Question 1 Which entry records equipment arriving in K2, before payment?
Question 2 In K3, Accounts Payable is debited by how many dollars?
Question 3 After K1 through K4, how many dollars are in Cash?
Question 4 After K4, what are total assets in dollars?
Question 5 A separate equipment purchase costs 18: pay 6 now and owe 12. Which entry balances AND describes it?