Basic Journal Entries Exercises
Exercise 1: Identify the Debit and Credit
Instructions: For each transaction, identify what accounts are affected, and state which one is debited
and which is credited.
No. Transaction Debit Account Credit Account
1 Owner invested ■100,000 cash to start the business.
2 Purchased office supplies for ■5,000 cash.
3 Bought equipment on account worth ■25,000.
4 Paid ■2,000 for utilities.
5 Received ■15,000 service income in cash.
6 Paid ■10,000 to a supplier for previous credit purchase.
7 Owner withdrew ■3,000 for personal use.
8 Billed a client ■8,000 for services rendered.
9 Received ■5,000 from a client previously billed.
10 Paid ■1,000 for advertising expense.
Exercise 2: Prepare Journal Entries
Instructions: Using the transactions below, record the journal entries in proper form.
1. Oct. 1 – Began business with ■150,000 cash investment.
2. Oct. 2 – Bought office furniture worth ■30,000, paying ■10,000 cash and the rest on account.
3. Oct. 3 – Paid ■2,500 for office rent.
4. Oct. 4 – Earned ■8,000 service income in cash.
5. Oct. 5 – Billed a client ■6,000 for consulting services.
6. Oct. 6 – Received ■4,000 from the client previously billed.
7. Oct. 7 – Paid ■3,000 salary to an employee.
8. Oct. 8 – Paid ■5,000 to settle part of the account payable.
9. Oct. 9 – Owner withdrew ■2,000 for personal use.
10. Oct. 10 – Received ■3,000 advance payment from a client for future services.
Exercise 3: Find the Error
Instructions: Each entry below has a mistake in debit/credit placement or account used. Identify and
correct the error.
No. Incorrect Entry What's Wrong? Correct Entry
1 Rent Expense – Debit ■2,000; Cash – Debit ■2,000
2 Accounts Payable – Credit ■10,000; Equipment – Credit ■10,000
3 Service Revenue – Debit ■5,000; Cash – Credit ■5,000
Answer Key
Exercise 1 Answers:
1. Debit: Cash | Credit: Owner’s Capital
2. Debit: Office Supplies | Credit: Cash
3. Debit: Equipment | Credit: Accounts Payable
4. Debit: Utilities Expense | Credit: Cash
5. Debit: Cash | Credit: Service Revenue
6. Debit: Accounts Payable | Credit: Cash
7. Debit: Drawing | Credit: Cash
8. Debit: Accounts Receivable | Credit: Service Revenue
9. Debit: Cash | Credit: Accounts Receivable
10. Debit: Advertising Expense | Credit: Cash
Exercise 2 Sample Journal Entries:
1. Cash ■150,000 | Capital ■150,000
2. Office Furniture ■30,000 | Cash ■10,000, Accounts Payable ■20,000
3. Rent Expense ■2,500 | Cash ■2,500
4. Cash ■8,000 | Service Revenue ■8,000
5. Accounts Receivable ■6,000 | Service Revenue ■6,000
6. Cash ■4,000 | Accounts Receivable ■4,000
7. Salaries Expense ■3,000 | Cash ■3,000
8. Accounts Payable ■5,000 | Cash ■5,000
9. Drawing ■2,000 | Cash ■2,000
10. Cash ■3,000 | Unearned Revenue ■3,000
Exercise 3 Answers:
1. Wrong: Both debited. Correct: Rent Expense (Debit), Cash (Credit)
2. Wrong: Both credited. Correct: Equipment (Debit), Accounts Payable (Credit)
3. Wrong: Service Revenue debited. Correct: Cash (Debit), Service Revenue (Credit)