Event No. 6. On June 1, 20X6 Mrs. Huske realized that the business was growing and in this connection rented a larger office. $2,400 cash was paid in advance for a 1-year rent of the new lease. The transaction decreases one asset account (Cash) and increases another (Prepaid Rent). To increase the Prepaid Rent account it is debited and to decrease the Cash account it is credited:

Illustration 12: Effect of rent payment in T accounts

This is an asset exchange transaction.

Illustration 13: Effect of rent payment in the horizontal model

Event No. 7. On June 15, 20X6 Huske's Consultants received $1,500 cash from Mandy Food Store for the provided services (see Event No. 3). Cash collection increases one asset account (Cash) and decreases the other (Accounts Receivable). Cash is debited Accounts Receivable are credited:

Illustration 14: Effect of cash collection in T accounts

This is an asset exchange transaction:

Illustration 15: Effect of cash collection in the horizontal model

Event No. 8. On June 31, 20X6 Mrs. Huske signed up a contract with Mining Company to perform consulting services. Huske's Consultants received an advance cash payment in amount of $3,600 for the one-year contract. The transaction acts to increase assets (Cash) and liabilities (Unearned Revenue). The asset is debited and the liability is credited:

Illustration 16: Effect of cash advance receipt in T accounts

This is an asset source transaction:

Illustration 17: Effect of cash advance receipt in the horizontal model