Exercises: Debits and credits

Doña Mary opens the stationery shop «El Compás», contributing $\$80,000.00$ in cash out of her own pocket to start the business.

1. a) Which two accounts are involved in this transaction?
2. b) State which one is debited and which one is credited, and explain why.

The stationery shop «El Compás» makes two merchandise purchases: one for cash, $\$12,500.00$, paid from the bank account, and one on credit, $\$8,000.00$, which it will owe to its suppliers.

For each purchase, state which accounts are involved, which one is debited and which one is credited, with the amount.

Accounts don't all behave the same way: some grow with debits and others with credits. Classify each of these accounts of the stationery shop «El Compás» as asset, liability, equity, revenue, or expense, and state whether its normal balance is debit (it grows with debits) or credit (it grows with credits). Show your answer in a table:

• Bank

• Suppliers (accounts payable)

• Owner's capital

• Sales

• Rent expense

• Computer equipment