Answer:
Consider the following equation:
Assets = Equity + Liability......................Equation1
As
Equity = Share Capital + Retained Earnings
And
Retained earnings = Sales - Expenses - Dividends paid
Now by putting values in the equation 1:
Assets = (Share Capital + Sales - Expenses - Dividends paid) + Liability
Assets + Expenses + Dividends paid = Share Capital + Sales + Liability
Now remember that the figures that are on the left are debit in nature and figures in the right are credit in nature.
As we know cash and accounts receivable are assets in nature so these will be debited. The dividends clearly would be debited on the basis of the above equation and the salaries and wages which are expense in nature should be debited.
Now the Accounts payable is liability and must be credited and Sales which is also credit in nature must be credited.
The mention cases considers the increase in them which is the general case. If these narratives decreases then the debit entry would convert into credit.
