1. © 2000 South-Western Educational Publishing PAID CASH FOR INSURANCE Lesson 4-2, page 72 August 4. Paid cash for insurance, $1,200.00. Check No. 2. 1.Which accounts are affected? Prepaid Insurance Cash 4.How is each amount entered in the accounts? Assets increase on the debit side. Assets decrease on the credit side. 3.How is each classification changed? Assets are increased. Assets are decreased. 2.How is each account classified? Prepaid Insurance is as asset account. Cash is as asset account. Cash Prepaid Insurance Debit Normal Balance  1,200.00  Debit Normal Balance

2. © 2000 South-Western Educational Publishing PAID CASH FOR INSURANCE (continued) Lesson 4-2, page 72 August 4. Paid cash for insurance, $1,200.00. Check No. 2. 1 3 4 1.Write the date. 2.Debit Prepaid Insurance. 3.Credit Cash. 4.Write the source document number. 2

3. © 2000 South-Western Educational Publishing PAID CASH ON ACCOUNT Lesson 4-2, page 74 August 11. Paid cash on account to Ling Music Supplies, $1,360.00, Check No. 3. 1.Which accounts are affected? Accounts Payable—Ling Music Supplies Cash 4.How is each amount entered in the accounts? Liabilities decrease on the debit side. Assets decrease on the credit side. 3.How is each classification changed? Liabilities are decreased. Assets are decreased. 2.How is each account classified? Accts. Pay.—Ling Music Supplies is a liability account. Cash is an asset account. Cash Accts. Pay.—Ling Music Supplies Credit Normal Balance  1,360.00  Debit Normal Balance

4. © 2000 South-Western Educational Publishing PAID CASH ON ACCOUNT (continued) Lesson 4-2, page 74 August 11. Paid cash on account to Ling Music Supplies, $1,360.00, Check No. 3. 1 3 4 1.Write the date. 2.Debit Accounts Payable—Ling Music Supplies. 3.Credit Cash. 4.Write the source document number. 2