Question

Cash 20,000 Common Stock 20,000 Do you see how the debit and the credit clearly stand...

Cash 20,000

Common Stock 20,000

Do you see how the debit and the credit clearly stand out by the indentation? Also, the debit goes first! Now, can anyone give us another example journal entry for a different transaction?

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Answer #1
  • Another example of transaction can be:

Merchandise Inventory purchased $ 4,000 for Cash

Journal entry would be

Accounts title

Debit

Credit

Merchandise Inventory

$             4,000.00

   Cash

$            4,000.00

  • Merchandise inventory is debited because its an asset account and is increased when debited.
  • Cash is going out or paid off, and hence the same is credited.
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