What are the journal entries for XYZ Services’ February 2025 transactions: $30,000 2-year bank loan, $6,000 office furniture bought on credit, $10,000 cash consulting revenue, $3,000 bank transfer payment to furniture supplier, $500 office supplies bought in cash and immediately used, $8,000 consulting revenue not yet received, $800 utilities paid by bank transfer, and owner investment of a $15,000 vehicle?

What you are doing in this problem

You are converting business events into journal entries using double-entry accounting. For each transaction, identify the accounts affected, decide whether each account increases or decreases, then apply debit and credit rules.

February 2025 journal entries (by transaction)

(1) Obtain a 2-year bank loan, $30,000 deposited

• Debit: $\text{Cash}$ (asset increases)
• Credit: $\text{Long-term Loan Payable}$ (liability increases)

$$\text{Dr Cash }30{,}000 \\ \text{Cr Long-term Loan Payable }30{,}000$$

(2) Buy office furniture on credit, $6,000

• Debit: $\text{Office Furniture}$ (asset increases)
• Credit: $\text{Accounts Payable}$ (liability increases)

$$\text{Dr Office Furniture }6{,}000 \\ \text{Cr Accounts Payable }6{,}000$$

(3) Provide consulting services and receive $10,000 cash

• Debit: $\text{Cash}$ (asset increases)
• Credit: $\text{Service Revenue}$ (revenue increases)

$$\text{Dr Cash }10{,}000 \\ \text{Cr Service Revenue }10{,}000$$

(4) Pay $3,000 to the furniture supplier by bank transfer

• Debit: $\text{Accounts Payable}$ (liability decreases)
• Credit: $\text{Cash}$ (asset decreases)

$$\text{Dr Accounts Payable }3{,}000 \\ \text{Cr Cash }3{,}000$$

Handling immediate-use supplies and other expenses

(5) Buy $500 office supplies in cash, immediately put into use Because they were immediately used, record them as an expense.

• Debit: $\text{Office Supplies Expense}$ (expense increases)
• Credit: $\text{Cash}$ (asset decreases)

$$\text{Dr Office Supplies Expense }500 \\ \text{Cr Cash }500$$

(7) Pay $800 utilities by bank transfer

• Debit: $\text{Utilities Expense}$
• Credit: $\text{Cash}$

$$\text{Dr Utilities Expense }800 \\ \text{Cr Cash }800$$

Recording revenue earned but not yet collected (accrual)

(6) Provide consulting services, $8,000 not yet received Revenue is recognized when earned, so record a receivable.

• Debit: $\text{Accounts Receivable}$ (asset increases)
• Credit: $\text{Service Revenue}$ (revenue increases)

$$\text{Dr Accounts Receivable }8{,}000 \\ \text{Cr Service Revenue }8{,}000$$

Owner investment of a non-cash asset

(8) Shareholder invests a vehicle valued at $15,000

• Debit: $\text{Vehicle}$ (asset increases)
• Credit: $\text{Owner's Capital}$ (sole proprietorship) or $\text{Common Stock / Share Capital}$ (corporation), equity increases

$$\text{Dr Vehicle }15{,}000 \\ \text{Cr Owner's Capital (or Common Stock) }15{,}000$$

Quick check

Every entry balances because total debits equal total credits for each transaction, and the accounts match the economic reality (cash received or paid, liabilities created or reduced, revenue earned, expenses incurred).