Appendix A. think there are two parts to every entry what did the Co. receive why did we receive it...

Appendix A

think

• there are two parts to every entrywhat did the Co. receive

why did we receive it

OR

what did it give up

why did we give it up

for each part of the entry - think

• will this go on the

income statement

balance sheet

Sweet TemptationsIncome Statement

for the month ending Jan. 31, 2005

Sales 8,100Cost of goods sold 3,645

Gross profit 4,455Expenses 3,845

Income from operations 610

Interest expense 8

Net Income 602$

Sweet TemptationsStatement of Owners' Equity

for the month ending Jan. 31, 2005

Owners' equity @ 12/31/04 15,000Net income 602less distributions 50Owners' equity @1/31/05 15,552$

Sweet TempationsBalance Sheet

as of Jan. 31, 2005

cash 11,030$ acc payable 4,320$ acc receivable 100 notes payable 1,200$ inventory 2,295 interest payable 8 supplies 670 current liabilities 5,528 prepaid rent 5,000

current assets 19,095$

equipment 2,000 accum dep (15)

long-term assets 1,985$ owners' equity 15,552 #REF!assets 21,080$ liab & owner equity 21,080

for each part of the entry - think

• is this a(n)

revenue (sales)

expense

asset

liability

contribution from the owner

Accounting cycle

• general journal - recording

• general ledger - posting

• trial balance

• adjusting journal entries

• general ledger - posting

• trial balance

• financial statements

general journal - recording

• the general journal is a diary

• it is in chronological order

• in the order transactions or events occur

account title acctdate explanation no debit credit

15-Dec-98 Cash 15,000 Owners' equity 15,000Anna Cox made initial investment

account title acctdate explanation no debit credit

15-Dec-98 Cash 15,000 Owners' equity 15,000Anna Cox made initial investment

16-Dec-98 Prepaid rent 6,000 Cash 6,000Paid 6 months rent in advance toWestw ood Mall

account title acctdate explanation no debit credit

15-Dec-98 Cash 15,000 Owners' equity 15,000Anna Cox made initial investment

16-Dec-98 Prepaid rent 6,000 Cash 6,000Paid 6 months rent in advance toWestw ood Mall

17-Dec-98 Supplies 700 Cash 700purchases office supplies from CitySupply Co.

General ledger - posting

• the general ledger is an account

• your checkbook is a ledger account it shows increases in the account

decreases in the account

the account balance

account title acctdate explanation no debit credit

15-Dec-98 Cash 15,000 Owners' equity 15,000Anna Cox made initial investment

16-Dec-98 Prepaid rent 6,000 Cash 6,000Paid 6 months rent in advance toWestw ood Mall

17-Dec-98 Supplies 700 Cash 700purchases office supplies from CitySupply Co.

account title acctdate explanation no debit credit

15-Dec-98 Cash 101 15,000 Owners' equity 301 15,000Anna Cox made initial investment

16-Dec-98 Prepaid rent 107 6,000 Cash 101 6,000Paid 6 months rent in advance toWestw ood Mall

17-Dec-98 Supplies 106 700 Cash 101 700purchases office supplies from CitySupply Co.

General Ledger 101Cash

debitdate ref debit credit balance

15-Dec-98 GJ 15,000 15,000

General Ledger 301Owners' equity

creditdate ref debit credit balance

15-Dec-98 GJ 15,000 15,000

General Ledger 107Prepaid rent

debitdate ref debit credit balance

16-Dec-98 GJ 6,000 6,000

General Ledger 101Cash

debitdate ref debit credit balance

15-Dec-98 GJ 15,000 15,000

16-Dec-98 GJ 6,000 9,000

General Ledger 106Supplies

debitdate ref debit credit balance

17-Dec-98 GJ 700 700

General Ledger 101Cash

debitdate ref debit credit balance

15-Dec-98 GJ 15,000 15,000

16-Dec-98 GJ 6,000 9,000

17-Dec-98 GJ 700 8,300

account title acctdate explanation no debit credit

20-Dec-98 Inventory 1,620 Accounts payable 1,620purchased inventory on credit fromUnlimited Decadence

account title acctdate explanation no debit credit

20-Dec-98 Inventory 1,620 Accounts payable 1,620purchased inventory on credit fromUnlimited Decadence

29-Dec-98 Store equipment 2,200 Cash 1,000 Notes payable 1,200purchased store equipment fromAce Equip. Co. and signed a 3month note

account title acctdate explanation no debit credit

20-Dec-98 Inventory 1,620 Accounts payable 1,620purchased inventory on credit fromUnlimited Decadence

29-Dec-98 Store equipment 2,200 Cash 1,000 Notes payable 1,200purchased store equipment fromAce Equip. Co. and signed a 3month note

30-Dec-98 Accounts receivable 400 Store equipment 400Sold unneeded desk to TheHardw are Store

account title acctdate explanation no debit credit

20-Dec-98 Inventory 105 1,620 Accounts payable 201 1,620purchased inventory on credit fromUnlimited Decadence

29-Dec-98 Store equipment 123 2,200 Cash 101 1,000 Notes payable 204 1,200purchased store equipment fromAce Equip. Co. and signed a 3month note

30-Dec-98 Accounts receivable 103 400 Store equipment 123 400Sold unneeded desk to TheHardw are Store

General Ledger 105Inventory

debitdate ref debit credit balance

20-Dec-98 GJ 1,620 1,620

General Ledger 201Accounts payable

creditdate ref debit credit balance

20-Dec-98 GJ 1,620 1,620

General Ledger 123Store equipment

debitdate ref debit credit balance

29-Dec-98 GJ 2,200 2,200

General Ledger 204Notes payable

creditdate ref debit credit balance

29-Dec-98 GJ 1,200 1,200

General Ledger 101Cash

debitdate ref debit credit balance

15-Dec-98 GJ 15,000 15,000

16-Dec-98 GJ 6,000 9,000

17-Dec-98 GJ 700 8,300

29-Dec-98 GJ 1,000 7,300

General Ledger 103Accounts receivable

debitdate ref debit credit balance

30-Dec-98 GJ 400 400

General Ledger 123Store equipment

debitdate ref debit credit balance

29-Dec-98 GJ 2,200 2,200

30-Dec-98 GJ 400 1,800

Sweet TemptationsIncome Statement

for the month ending Dec. 31, 2004

Sales 0Cost of goods sold 0

Gross profit 0Expenses 0

Income from operations 00Income tax expense 0

Net Income -$

Sweet TempationsBalance Sheet

as of Dec. 31, 2004

cash 7,300$ acc payable 1,620$ acc receivable 400 notes payable 1,200 inventory 1,620 current liabilities 2,820 supplies 700 prepaid rent 6,000

current assets 16,020$

equipment 1,800 long-term assets 1,800$ owners' equity 15,000 #REF!assets 17,820$ liab & owner equity 17,820

account title acctdate explanation no debit credit

02-Jan-99 Cash 300 Sales 300Cost of goods sold 135 Inventory 135made cash sale

Sweet TemptationsIncome Statement

for the period ending Jan. 2, 2005

Sales 300Cost of goods sold 135

Gross profit 165Expenses 0

Income from operations 165

Income tax expense 0

Net Income 165$

account title acctdate explanation no debit credit

02-Jan-99 Cash 300 Sales 300Cost of goods sold 135 Inventory 135made cash sale

02-Jan-99 Accounts payable 1,620 Cash 1,620paid Unlimited Decadence forinventory purchased on 12/20/98

account title acctdate explanation no debit credit

02-Jan-99 Cash 300 Sales 300Cost of goods sold 135 Inventory 135made cash sale

02-Jan-99 Accounts payable 1,620 Cash 1,620paid Unlimited Decadence forinventory purchased on 12/20/98

04-Jan-99 Inventory 4,320 Accounts payable 4,320purchased inventory from UnlimitedDecadence

account title acctdate explanation no debit credit

02-Jan-99 Cash 101 300 Sales 401 300Cost of goods sold 501 135 Inventory 105 135made cash sale

02-Jan-99 Accounts payable 201 1,620 Cash 101 1,620paid Unlimited Decadence forinventory purchased on 12/20/98

04-Jan-99 Inventory 105 4,320 Accounts payable 201 4,320purchased inventory from UnlimitedDecadence

General Ledger 101Cash

debitdate ref debit credit balance

15-Dec-98 GJ 15,000 15,000

16-Dec-98 GJ 6,000 9,000

17-Dec-98 GJ 700 8,300

29-Dec-98 GJ 1,000 7,300

02-Jan-99 GJ 300 7,600

General Ledger 401Sales

creditdate ref debit credit balance

02-Jan-99 GJ 300 300

General Ledger 501Cost of goods sold

debitdate ref debit credit balance

02-Jan-99 GJ 135 135

General Ledger 105Inventory

debitdate ref debit credit balance

20-Dec-98 GJ 1,620 1,620

02-Jan-99 GJ 135 1,485

General Ledger 201Accounts payable

creditdate ref debit credit balance

20-Jan-98 GJ 1,620 1,620

03-Jan-99 GJ 1,620 0

General Ledger 101Cash

debitdate ref debit credit balance

15-Dec-98 GJ 15,000 15,000

16-Dec-98 GJ 6,000 9,000

17-Dec-98 GJ 700 8,300

29-Dec-98 GJ 1,000 7,300

02-Jan-99 GJ 300 7,600

03-Jan-99 GJ 1,620 5,980

General Ledger 105Inventory

debitdate ref debit credit balance

20-Dec-98 GJ 1,620 1,620

02-Jan-99 GJ 135 1,485

04-Jan-99 GJ 4,320 5,805

General Ledger 201Accounts payable

creditdate ref debit credit balance

20-Jan-98 GJ 1,620 1,620

03-Jan-99 GJ 1,620 0

04-Jan-99 GJ 4,320 4,320

account title acctdate explanation no debit credit

06-Jan-99 Accounts receivable 100 Sales 100Cost of goods sold 45 Inventory 45made credit sale

account title acctdate explanation no debit credit

06-Jan-99 Accounts receivable 100 Sales 100Cost of goods sold 45 Inventory 45made credit sale

07-Jan-99 Cash 400 Accounts receivable 400collected amount ow ed from TheHardw are Store for desk sold on12/30/98

account title acctdate explanation no debit credit

06-Jan-99 Accounts receivable 100 Sales 100Cost of goods sold 45 Inventory 45made credit sale

07-Jan-99 Cash 400 Accounts receivable 400collected amount ow ed from TheHardw are Store for desk sold on12/30/98

20-Jan-99 Withdrawals 50 Cash 50Anna Cox w ithdrew cash forpersonal use

account title acctdate explanation no debit credit

06-Jan-99 Accounts receivable 103 100 Sales 401 100Cost of goods sold 501 45 Inventory 105 45made credit sale

07-Jan-99 Cash 101 400 Accounts receivable 103 400collected amount ow ed from TheHardw are Store for desk sold on12/30/98

20-Jan-99 Withdrawals 304 50 Cash 101 50Anna Cox w ithdrew cash forpersonal use

General Ledger 103Accounts receivable

debitdate ref debit credit balance

30-Dec-98 GJ 400 400

06-Jan-99 GJ 100 500

General Ledger 401Sales

creditdate ref debit credit balance

02-Jan-99 GJ 300 300

06-Jan-99 GJ 100 400

General Ledger 501Cost of goods sold

debitdate ref debit credit balance

02-Jan-99 GJ 135 135

06-Jan-99 GJ 45 180

General Ledger 105Inventory

debitdate ref debit credit balance

20-Dec-98 GJ 1,620 1,620

02-Jan-99 GJ 135 1,485

04-Jan-99 GJ 4,320 5,805

06-Jan-99 GJ 45 5,760

General Ledger 101Cash

debitdate ref debit credit balance

15-Dec-98 GJ 15,000 15,000

16-Dec-98 GJ 6,000 9,000

17-Dec-98 GJ 700 8,300

29-Dec-98 GJ 1,000 7,300

02-Jan-99 GJ 300 7,600

03-Jan-99 GJ 1,620 5,980

07-Jan-99 GJ 400 6,380

General Ledger 103Accounts receivable

debitdate ref debit credit balance

30-Dec-98 GJ 400 400

06-Jan-99 GJ 100 500

07-Jan-99 GJ 400 100

General Ledger 304Withdrawals

debitdate ref debit credit balance

01-Jan-99 GJ 50 50

General Ledger 101Cash

debitdate ref debit credit balance

15-Dec-98 GJ 15,000 15,000

16-Dec-98 GJ 6,000 9,000

17-Dec-98 GJ 700 8,300

29-Dec-98 GJ 1,000 7,300

02-Jan-99 GJ 300 7,600

03-Jan-99 GJ 1,620 5,980

07-Jan-99 GJ 400 6,380

20-Jan-99 GJ 50 6,330

account title acctdate explanation no debit credit

25-Jan-99 Consulting expense 200 Cash 200paid consultant for promotioncoordination

account title acctdate explanation no debit credit

25-Jan-99 Consulting expense 200 Cash 200paid consultant for promotioncoordination

25-Jan-99 Advertising expense 300 Cash 300

account title acctdate explanation no debit credit

25-Jan-99 Consulting expense 200 Cash 200paid consultant for promotioncoordination

25-Jan-99 Advertising expense 300 Cash 300paid for advertising in promotionalf lyer

29-Jan-99 Store equipment 200 Cash 200purchased store equipment

account title acctdate explanation no debit credit

25-Jan-99 Consulting expense 200 Cash 200paid consultant for promotioncoordination

25-Jan-99 Advertising expense 300 Cash 300paid for advertising in promotionalf lyer

29-Jan-99 Store equipment 200 Cash 200purchased store equipment

30-Jan-99 Salaries expense 2,050 Cash 2,050paid employees' salaries

account title acctdate explanation no debit credit

25-Jan-99 Consulting expense 502 200 Cash 101 200paid consultant for promotioncoordination

25-Jan-99 Advertising expense 503 300 Cash 101 300paid for advertising in promotionalf lyer

29-Jan-99 Store equipment 123 200 Cash 101 200purchased store equipment

30-Jan-99 Salaries expense 504 2,050 Cash 101 2,050paid employees' salaries

General Ledger 502Consulting expense

debitdate ref debit credit balance

25-Jan-99 GJ 200 200

General Ledger 503Advertising expense

debitdate ref debit credit balance

25-Jan-99 GJ 300 300

General Ledger 123Store equipment

debitdate ref debit credit balance

29-Dec-98 GJ 2,200 2,200

30-Dec-98 GJ 400 1,800

29-Jan-99 GJ 200 2,000

General Ledger 504Salaries expense

debitdate ref debit credit balance

30-Jan-99 GJ 2,050 2,050

General Ledger 101Cash

debitdate ref debit credit balance

15-Dec-98 GJ 15,000 15,000

16-Dec-98 GJ 6,000 9,000

17-Dec-98 GJ 700 8,300

29-Dec-98 GJ 1,000 7,300

02-Jan-99 GJ 300 7,600

03-Jan-99 GJ 1,620 5,980

07-Jan-99 GJ 400 6,380

20-Jan-99 GJ 50 6,330

31-Jan-99 GJ 200 6,130

31-Jan-99 GJ 300 5,830

31-Jan-99 GJ 200 5,630

31-Jan-99 GJ 2,050 3,580

account title acctdate explanation no debit credit

31-Jan-99 Telephone expense 60 Cash 60paid telephone bill

account title acctdate explanation no debit credit

31-Jan-99 Telephone expense 60 Cash 60paid telephone bill

31-Jan-99 Utlilites expense 190 Cash 190paid utilities bill

account title acctdate explanation no debit credit

31-Jan-99 Telephone expense 505 60 Cash 101 60paid telephone bill

31-Jan-99 Utlilites expense 506 190 Cash 101 190paid utilities bill

General Ledger 505Telephone expense

debitdate ref debit credit balance

31-Jan-99 GJ 60 60

General Ledger 506Utilities expense

debitdate ref debit credit balance

31-Jan-99 GJ 190 190

General Ledger 101Cash

debitdate ref debit credit balance

15-Dec-98 GJ 15,000 15,000

16-Dec-98 GJ 6,000 9,000

17-Dec-98 GJ 700 8,300

29-Dec-98 GJ 1,000 7,300

02-Jan-99 GJ 300 7,600

03-Jan-99 GJ 1,620 5,980

07-Jan-99 GJ 400 6,380

20-Jan-99 GJ 50 6,330

31-Jan-99 GJ 200 6,130

31-Jan-99 GJ 300 5,830

31-Jan-99 GJ 200 5,630

31-Jan-99 GJ 2,050 3,580

31-Jan-99 GJ 60 3,520

31-Jan-99 GJ 190 3,330

account title acctdate explanation no debit credit

31-Jan-99 Telephone expense 505 60 Cash 101 60paid telephone bill

31-Jan-99 Utlilites expense 506 190 Cash 101 190paid utilities bill

31-Jan-99 Cash 7,700 Sales 7,700Cost of goods sold 3,465 Inventory 3,465to record cash sales from 1/3/99 -1/31/99

General Ledger 101Cash

debitdate ref debit credit balance

15-Dec-98 GJ 15,000 15,00016-Dec-98 GJ 6,000 9,00017-Dec-98 GJ 700 8,30029-Dec-98 GJ 1,000 7,30002-Jan-99 GJ 300 7,60003-Jan-99 GJ 1,620 5,98007-Jan-99 GJ 400 6,38020-Jan-99 GJ 50 6,33031-Jan-99 GJ 200 6,13031-Jan-99 GJ 300 5,83031-Jan-99 GJ 200 5,63031-Jan-99 GJ 2,050 3,58031-Jan-99 GJ 60 3,52031-Jan-99 GJ 190 3,33031-Jan-99 GJ 7,700 11,030

General Ledger 401Sales

creditdate ref debit credit balance

02-Jan-99 GJ 300 300

06-Jan-99 GJ 100 400

31-Jan-99 GJ 7,700 8,100

General Ledger 501Cost of goods sold

debitdate ref debit credit balance

02-Jan-99 GJ 135 135

06-Jan-99 GJ 45 180

31-Jan-99 GJ 3,465 3,645

General Ledger 105Inventory

debitdate ref debit credit balance

20-Dec-98 GJ 1,620 1,620

02-Jan-99 GJ 135 1,485

04-Jan-99 GJ 4,320 5,805

06-Jan-99 GJ 45 5,760

31-Jan-99 GJ 3,465 2,295

trial balance

• book doesn’t emphasize trail balance as a step

• it is just a listing of account balances

adjusting journal entries

• adjustments that we need to make to account balances

• same old General Journal

• same old General Ledger

debits credits

cash 11,030accounts receivable 100inventory 2,295supplies 700prepaid rent 6,000store equipment 2,000accumulated depreciationaccounts payable 4,320notes payable 1,200interest payableowners' equity 15,000withdrawals 50sales 8,100cost of goods sold 3,645consulting expense 200advertising expense 300salaries expense 2,050telephone expense 60utilities expense 190supplies expenserent expenseinterest expensedepreciation expense

28,620 28,620

Sweet TemptationsIncome Statement

for the month ending Jan. 31, 2005

Sales 8,100Cost of goods sold 3,645

Gross profit 4,455Expenses ??? 2,800

Income from operations 1,655

Interest expense 0

Net Income 1,655$

Sweet TemptationsStatement of Owners' Equity

for the month ending Jan. 31, 2005

Owners' equity @ 12/31/04 15,000Net income 1,655less distributions 50Owners' equity @1/31/05 16,605$

Sweet TempationsBalance Sheet

as of Jan. 31, 2005

cash 11,030$ acc payable 4,320$ acc receivable 100 notes payable 1,200$ inventory 2,295 interest payable - supplies 700 current liabilities 5,520 prepaid rent 6,000

current assets 20,125$

equipment 2,000 accum dep -

long-term assets 2,000$ owners' equity 16,605 #REF!assets 22,125$ liab & owner equity 22,125

account title acctdate explanation no debit credit

31-Jan-99 Supply expense 30 Supplies 30supplies used during Jan.

account title acctdate explanation no debit credit

31-Jan-99 Supply expense 30 Supplies 30supplies used during Jan.

31-Jan-99 Rent expense 1,000 Prepaid rent 1,000expiration of one-month's rent paidin advance on 12/16/98

account title acctdate explanation no debit credit

31-Jan-99 Supply expense 30 Supplies 30supplies used during Jan.

31-Jan-99 Rent expense 1,000 Prepaid rent 1,000expiration of one-month's rent paidin advance on 12/16/98

31-Jan-99 Interest expense 8 Interest payable 8interest accrued on note payable

account title acctdate explanation no debit credit

31-Jan-99 Supply expense 30 Supplies 30supplies used during Jan.

31-Jan-99 Rent expense 1,000 Prepaid rent 1,000expiration of one-month's rent paidin advance on 12/16/98

31-Jan-99 Interest expense 8 Interest payable 8interest accrued on note payable

31-Jan-99 Depreciation expense 15 Accumulated depreciation 15depreciation on store equipment

account title acctdate explanation no debit credit

31-Jan-99 Supply expense 507 30 Supplies 106 30supplies used during Jan.

31-Jan-99 Rent expense 508 1,000 Prepaid rent 107 1,000expiration of one-month's rent paidin advance on 12/16/98

31-Jan-99 Interest expense 509 8 Interest payable 205 8interest accrued on note payable

31-Jan-99 Depreciation expense 510 15 Accumulated depreciation 124 15depreciation on store equipment

General Ledger 507Supplies expense

debitdate ref debit credit balance

31-Jan-99 AJE 30 30

General Ledger 106Supplies

debitdate ref debit credit balance

17-Dec-98 GJ 700 700

31-Jan-99 AJE 30 670

General Ledger 508Rent expense

debitdate ref debit credit balance

31-Jan-99 AJE 1,000 1,000

General Ledger 107Prepaid rent

debitdate ref debit credit balance

16-Dec-98 GJ 6,000 6,000

31-Jan-99 AJE 1,000 5,000

General Ledger 509Interest expense

debitdate ref debit credit balance

31-Jan-99 AJE 8 8

General Ledger 205Interest payable

creditdate ref debit credit balance

31-Jan-99 AJE 8 8

General Ledger 510Depreciation expense

debitdate ref debit credit balance

31-Jan-99 AJE 15 15

General Ledger 124Accumulated depreciation

creditdate ref debit credit balance

31-Jan-99 AJE 15 15

trial balance

debits credits

cash 11,030accounts receivable 100inventory 2,295supplies 670prepaid rent 5,000store equipment 2,000accumulated depreciation 15accounts payable 4,320notes payable 1,200interest payable 8owners' equity 15,000withdrawals 50sales 8,100cost of goods sold 3,645consulting expense 200advertising expense 300salaries expense 2,050telephone expense 60utilities expense 190supplies expense 30rent expense 1,000interest expense 8depreciation expense 15

28,643 28,643

Sweet TemptationsIncome Statement

for the month ending Jan. 31, 2005

Sales 8,100Cost of goods sold 3,645

Gross profit 4,455Expenses 3,845

Income from operations 610

Interest expense 8

Net Income 602$

Sweet TemptationsStatement of Owners' Equity

for the month ending Jan. 31, 2005

Owners' equity @ 12/31/04 15,000Net income 602less distributions 50Owners' equity @1/31/05 15,552$

Sweet TempationsBalance Sheet

as of Jan. 31, 2005

cash 11,030$ acc payable 4,320$ acc receivable 100 notes payable 1,200$ inventory 2,295 interest payable 8 supplies 670 current liabilities 5,528 prepaid rent 5,000

current assets 19,095$

equipment 2,000 accum dep (15)

long-term assets 1,985$ owners' equity 15,552 #REF!assets 21,080$ liab & owner equity 21,080

February

a new game

set the score card to Zero

Sweet TemptationsIncome Statement

for the month of FEBRUARY

Sales 0Cost of goods sold 0

Gross profit 0Expenses 0

Income from operations 0

Interest expense 0

Net Income -$

Sweet TemptationsStatement of Owners' Equityfor the month of FEBRUARY

Owners' equity @ 1/31/05 15,552Net income 0less distributions 0Owners' equity @ 2/ 15,552$

Sweet TempationsBalance Sheet

as of Feb. 1, 2005

cash 11,030$ acc payable 4,320$ acc receivable 100 notes payable 1,200$ inventory 2,295 interest payable 8 supplies 670 current liabilities 5,528 prepaid rent 5,000

current assets 19,095$

equipment 2,000 accum dep (15)

long-term assets 1,985$ owners' equity 15,552 #REF!assets 21,080$ liab & owner equity 21,080