Post on 31-Mar-2015
transcript
Journal and Adjusting Entries
Rules To Remember• Accounts are not your checking or saving
accounts
• They are storage devices for your financial transactions
• When a Bank “Credits Your Account” for your deposits it is because your money is a Liability to them …. Our transactions are the opposite of the banking transactions
Rules To Remember
• Assets have a Normal Balance of DEBIT– To increase an Asset, make a Debit Entry– To decrease an Asset, make a Credit Entry
• Liabilities have a Normal Balance of Credit– To increase a Liability, make a Credit Entry– To decrease a Liability, make a Debit Entry
Rules To Remember• Equity has a Normal Balance of Credit
– To increase an Equity, make a Credit Entry– To decrease an Equity, make a Debit Entry
• Revenues have a Normal Balance of Credit– To increase a Revenue, make a Credit Entry– To decrease a Revenue, make a Debit Entry
• Expenses have a Normal Balance of DEBIT– To increase an Expense, make a Debit Entry– To decrease an Expense, make a Credit Entry
Rolon Kern Invested $1,200 in cash and $100 in Office Supplies to start Company
Date Description Debit Credit
1-2-04 Cash 1,200
Office Equip 100
Rolo Kern, Capital 1,300
Paid rent 3 months in advance $300
Date Description Debit Credit
1-2-04 Prepaid Rent 300
Cash 300
Purchased Office Equip on Account $50
Date Description Debit Credit
1-4-04 Office Equip 50
Accounts Payable 50
Purchased Office Supplies for Cash $40
Date Description Debit Credit
1-6-04 Office Supply 40
Cash 40
Collected $400 in cash for services Rendered
Date Description Debit Credit
1-8-04 Cash 400
Revenues 400
Paid Home Electric Bill from Company Funds $20
Date Description Debit Credit
1-12-04 Kern, Withdrawl 20
Cash 20
Provides services for $100, client will pay next month
Date Description Debit Credit
1-14-04 Account Receivable
100
Revenues 100
Paid wages $60
Date Description Debit Credit
1-16-04 Wage Expense 60
Cash 60
Placed ad for $70, will pay next month
Date Description Debit Credit
1-18-04 Advertising Expense 70
Accounts Payable 70
Balances as of 1-31-07 (Before Adjustments)
Date Description Debit Credit
1-31-07 Cash 1,180
Accounts Receivable 100
Pre-paid Rent 300
Office Supplies 40
Office Equip 150
Account Payable 120
Kern, Capital 1,300
Kern, Withdrawl 20
Revenues 500
Wage Expense 60
Advertising Expense 70
Totals 1,920 1,920
Balances as of 1-31-07 (Before Adjustments)
Date Description Debit Credit
1-31-07 Revenues 500
Wage Expense 60
Advertising Expense 70
Adjusting EntryOffice Supplies on hand total $6
Date Description Debit Credit
1-31-07 Supply Expense 34
Office Supplies 34
Adjusting EntryRent Expense For Month $100
Date Description Debit Credit
1-31-07 Rent Expense 100
Prepaid Rent 100
Adjusting EntryOffice Equip Depr $20
Date Description Debit Credit
1-31-07 Depreciation Expense 20
Accum Depr - Equip 20
Adjusting EntryOwe Employees $50 at end of month
Date Description Debit Credit
1-31-07 Wage Expense 50
Wages Payable 50
Balances as of 1-31-07 (After Adjustments)
Description TB Debit
TB Credit
ADJ Debit
ADJ Credit
ATB
Debit
ATB Credit
Cash 1,180 1,180
Accounts Receivable 100 100
Pre-paid Rent 300 100 200
Office Supplies 40 34 6
Office Equip 150 150
Accum Depr – Equip 20 20
Account Payable 120 120
Wages Payable 50 50
Kern, Capital 1,300 1300
Kern, Withdrawl 20 20
Revenues 500 500
Wage Expense 60 50 110
Depreciation Exp 20 20
Rent Expense 100 100
Office Supply Expense 34 34
Advertising Expense 70 70
Totals 1,920 1,920 204 204 1,990 1,990
Income Stmt & Balance Sheet as of 1-31-07 (After Adjustments)
Description ATB
Debit
ATB
Credit
INC Debit
Stmt Credit
Balance
Debit
Sheet
Credit
Cash 1,180 1,180
Accounts Receivable 100 100
Pre-paid Rent 200 200
Office Supplies 6 6
Office Equip 150 150
Accum Depr – Equip 20 20
Account Payable 120 120
Wages Payable 50 50
Kern, Capital 1,300 1,300
Kern, Withdrawl 20 20
Revenues 500 500
Wage Expense 110 110
Depreciation Exp 20 20
Rent Expense 100 100
Office Supply Expense 34 34
Advertising Expense 70 70
Totals 1,990 1,990 334 500 1,656 1,490
Net Income 166 166
Totals 1,990 1,990 500 500 1,656 1,656