Professional Documents
Culture Documents
Analyzing Transactions and Double Entry
Analyzing Transactions and Double Entry
31
Source Documents
Checks Employee Earnings Records Bills from Suppliers Purchase Orders
LIABILITIES
The debts of the business
+
OWNERS EQUITY
The owners financial interest in the business
35
Capital
Revenue
Expenses
Withdrawals
36
Capital C apital
Revenue R evenue
Expenses E xpenses
Withdrawals W ithdrawals
37
Capital C apital
Revenue R evenue
Expenses E xpenses
Withdrawals W ithdrawals
Dr
Dr
38
Capital C apital
Revenue R evenue
Cr
Cr
Write down the normal balance, debit, of A,E,W. The others are credits.
Expenses E xpenses
Withdrawals W ithdrawals
Dr
Dr
39
Dr Dr Dr
T Accounts
ASSETS
+ Record Increases LEFT SIDE Record Decreases RIGHT SIDE
LIABILITIES
Record Decreases LEFT SIDE + Record Increases RIGHT SIDE
OWNERS EQUITY
Record Decreases LEFT SIDE + Record Increases RIGHT SIDE
313
Objective 2
Identify the accounts affected. Classify the accounts affected. Determine the amount of increase or decrease for each account.
1. Apply the left-side-right side rules for each account affected. 2. Make the entry in T-account form.
314
Objective 3
An account balance is the difference between the amounts recorded on the two sides of an account.
315
THEN
the balance is recorded on the right side.
316
(a) 100,000 (b) 5,000 Account (d) 1,500 (e) 2,500 (f) 8,000 Bal. 83,000 17,000
Supplies
( e) 2,500 (c) 6,000 (b) 100,000 balances for Carter Consulting Services Bal. 3,500
SUMMARY OF ACCOUNT BALANCES (d) 1,500 ASSETS Prepaid Rent = LIABILITIES + OWNERS EQUITY 3,500 100,000
(f)
8,000
Equipment
3,500
100,000
Every transaction must have at least one debit and one credit. The total of the debits and credits recorded in the separate accounts must be EQUAL.
319
Any Account
Left Side
Right Side
Accountants
refer to the left side of an account as the debit side instead of saying the left side. The right side of the account is called the credit side.
320
321
1. Use the proper heading to include who, what, and when information. 2. List the accounts in chart of account order or in the same order as they appear in the financial statement. 3. Enter the ending balance of each account in the appropriate Debit or Credit column.
(A) On November 1, Chris Clark deposits $25,000 in a bank account in the name of NetSolutions.
JOURNAL
Date 1 Nov. 1 Cash 2 3 4 Chris Clark, Capital
2005
Page 1
Post. Ref.
Description
Debit 25 000 00
Credit
25 000 00
323
(A) On November 1, Chris Clark deposits $25,000 in a bank account in the name of NetSolutions.
324
Cash
Purchased land for building site.
20 000 00
325
Land
20,000
326
Accounts Payable
Purchased supplies on account.
1 350 00
327
Accounts Payable
Nov. 10 1,350
328
(D) On November 18, NetSolutions received fees of $7,500 from customers for services provided .
14
15 16 17 18 19 20 18 Cash 7 500 00
Fees Earned
Received fees from customers.
7 500 00
329
(D) On November 18, NetSolutions received fees of $7,500 from customers for services provided .
Fees Earned
Nov. 18 7,500
330
(E) Throughout the month, NetSolutions incurred the following expenses: wages, $2,125; rent, $800; utilities, $450; and miscellaneous, $275 .
18
19 20 21 22 23 24 30 Wages Expense Rent Expense Utilities Expense Miscellaneous Expense 2 125 00 800 00 450 00 275 00
Cash
Paid expenses.
3 650 00
331
(E) Throughout the month, NetSolutions incurred the following expenses: wages, $2,125; rent, $800; utilities, $450; and miscellaneous, $275 .
Wages Expense
2,125
Rent Expense
Nov. 30 800
Utilities Expense
Nov. 30 450
Miscellaneous Expense
Nov. 30 275
332
30
31 32 33 34 35 36 30 Accounts Payable 950 00
Cash
Paid creditors on account.
950 00
333
Accounts Payable
950 Nov. 10 1,350
334
(G) On November 30, a count revealed that $800 of the supplies inventory had been used.
25
26 27 28 29 30 31 30 Supplies Expense 800 00
Supplies
Supplies used during November.
800 00
335
(G) On November 30, a count revealed that $800 of the supplies inventory had been used.
Supplies Expense
800
336
(H) On November 30, Chris Clark withdrew $2,000 in cash from NetSolutions for personal use.
JOURNAL
Date
2005
Description
337
(H) On November 30, Chris Clark withdrew $2,000 in cash from NetSolutions for personal use.
338
Transaction authorized
Document prepared
339
The End
340