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Fredo Industries had the following transactions. 1. 2. 3. Borrowed $5,043 from the bank by signing a note. Paid $2,521 cash for a computer Purchased $454 of supplies on account. (a) Indicate what accounts are increased and decreased by each transaction Debit Analysis Credit Analysis 2 (b) Journalieeach transaction. (Credit account titles are automatically indented when the amount is entered

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Answer:

Transactions

1. Borrowed $5,043 from the bank by signing a note.

2. Paid $2,521 cash for a computer

3. Purchased $454 of supplies

(a)

  Debit                         Analysis          Credit               Analysis

1. Cash                         Increased      Note Payable   Increase

2. Office Equipment    Increased       Cash                 Decrease

3. Supplies Inventory  Increased       Cash                 Decrease

(b)   Journal Entries

                                     Debit    Credit

1. Cash                         $5,043

   Note Payable                         $5043

2. Office Equipment    $2,521  

   Cash                                       $2,521

3. Supplies Inventory  $454

   Cash                                        $454

Explanation:

All the Assets and expenses accounts increase with debit entry and decreased by credit entry.

All the Revenue, Equity and Liability accounts increase with credit entry and decreased by debit entry.

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