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    Selected transactions for H. Burns, Inc.

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    E2-1 Selected transactions for H. Burns, Inc., an interior decorating firm, in its first month of business, are as follows.

    Jan. 2 Invested $15,000 cash in business in exchange for common stock.
    3 Purchased used car for $4,000 cash for use in business.
    9 Purchased supplies on account for $500.
    11 Billed customers $1,800 for services performed.
    16 Paid $200 cash for advertising.
    20 Received $700 cash from customers billed on January 11.
    23 Paid creditor $300 cash on balance owed.
    28 Declared and paid a $1,000 cash dividend.
    Instructions

    For each transaction indicate the following.
    (a) The basic type of account debited and credited (asset, liability, stockholders' equity).
    (b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
    (c) Whether the specific account is increased or decreased.
    (d) The normal balance of the specific account.
    Use the following attach format, in which the January 2 transaction is given as an example.

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    Solution Preview

    E2-1 Selected transactions for H. Burns, Inc., an interior decorating firm, in its first month of business, are as follows.

    Jan. 2 Invested $15,000 cash in business in exchange for common stock.
    3 Purchased used car for $4,000 cash for use in business.
    9 Purchased supplies on account for $500.
    11 Billed customers $1,800 for services performed.
    16 Paid $200 cash for advertising.
    20 Received $700 cash from customers billed on January 11.
    23 Paid creditor $300 cash on balance ...

    Solution Summary

    This solution is to indicate for each transaction the following.
    (a) The basic type of account debited and credited (asset, liability, stockholders' equity).
    (b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
    (c) Whether the specific account is increased or decreased.
    (d) The normal balance of the specific account.

    $2.19

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