9. A = L + OE Describe Effect of the Following Transactions on a Company Borrow money Invest in company Pay off a note Purchase equipment Borrow funds to settle a debt
12. Using a T-Account 35 12 The cash account has a beginning balance of $35. A check for $12 is written to pay for supplies. Using a T-account, what is the ending balance of the cash account? Cash 23
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14. Explain How Debits and Credits Work Assets = Liabilities + Owners’ Equity
21. Example 1: Journal Entry Supplies purchased for $25 are purchased “on account.” Prepare the correct journal entry. What do we mean by purchased “on account?”
22. Example 2: Journal Entry A check for $100 is received in payment for services rendered. Make the correct journal entry.
23. Example 3: Journal Entry Merchandise is sold to a customer on account for $75. The cost of the product was $60. Make the journal entries.
24. Journal 1 Page 1 Date Transaction Ref. Debits Credits Jan. 1 Supplies 25 Accounts Payable 25 Purchased supplies on account. Feb. 1 Cash 101 100 Revenue 100 Received cash for services. Mar. 1 Accounts Receivable 75 Sales Revenue 75 Sold merchandise on account. Entered when posted to ledger.
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27. General Ledger Date Explanation Ref. Debits Credits Balance Jan. 1 Balance 100 2 Issued 100 shares of capital stock at $10 per share GJ1 1,000 1,100 3 Purchased equipment GJ1 300 800 4 Sold inventory GJ1 60 860 5 Monthly payment on loan GJ1 230 630 6 Revenue GJ1 2,500 3,130 ACCOUNT: Cash Account No. 101
28. Chart of Accounts ASSETS (100-199): Current Assets (100-150): 101 Cash 105 Accounts Receivable 107 Inventory Long-Term Assets (151-199 ): 151 Land 152 Buildings LIABILITIES (200-299): Current Liabilities (200-219): 201 Notes Payable 202 Accounts Payable Long-Term Liabilities (220-239): 222 Mortgage Payable OWNERS’ EQUITY (300-399): 301 Capital Stock 330 Retained Earnings SALES (400-499): 400 Sales Revenue EXPENSES (500-599): 500 Cost of Goods Sold 501 Sales Salaries and Commissions 523 Rent Expense 528 Advertising Expense 573 Utilities Expense 579 Accounting and Legal Fees