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How Business Activities Change the Accounting Equation
Transaction 1: August 1. Received cash from owner as an investment, $5,000.00
RECEIVING CASH
How Business Activities Change the Accounting Equation
PAYING CASH
Transaction 2: August 3. Paid cash for supplies, $275.00
Transaction 3:August 4. Paid cash for insurance, $1,200.00
How Business Activities Change the Accounting Equation
Transactions on Account
Transaction 4: August 7. Bought supplies on account from Supply Depot, $500.00
Transaction 5: August 11. Paid cash on account to Supply Depot, $300.00
How Transactions Change Owner’s Equity in an Accounting Equation
Transaction 6: August 12. Received cash from sales, $295.00
Transaction 7: August 12. Sold services on account to Oakdale School, $350.00
Revenue Transactions
How Transactions Change Owner’s Equity in an Accounting Equation
Expense TransactionsTransaction 8: August 12. Paid cash for rent,
$300.00.
Transaction 9: August 12. Paid cash for telephone bill, $40.00.
How Transactions Change Owner’s Equity in an Accounting Equation
Other Cash TransactionsTransaction 10: August 12. Received cash on
account from Oakdale School, $200.00
Transaction 11: August 12. Paid cash to owner for personal use, $125.00
Analyzing How Transactions Affect Accounts
RECEIVED CASH FROM OWNER AS AN INVESTMENT
August 1: Received cash from owner as an investment, $5,000.00.
Analyzing How Transactions Affect Accounts
PAID CASH FOR SUPPLIES
August 3: Paid cash for supplies, $275.00.
Analyzing How Transactions Affect Accounts
PAID CASH FOR INSURANCE
August 4: Paid cash for insurance, $1,200.00.
Analyzing How Transactions Affect Accounts
BOUGHT SUPPLIES ON ACCOUNT
August 7: Bought supplies on account from Supply Depot, $500.00.
Analyzing How Transactions Affect Accounts
PAID CASH ON ACCOUNT
August 11: Paid cash on account to Supply Depot, $300.00.
Analyzing How Transactions Affect Owner’s Equity Accounts
RECEIVED CASH FROM SALES
August 12: Received cash from sales, $295.00.
Analyzing How Transactions Affect Owner’s Equity Accounts
SOLD SERVICES ON ACCOUNT
August 12: Sold services on account to Oakdale School, $350.00.
Analyzing How Transactions Affect Owner’s Equity Accounts
PAID CASH FOR AN EXPENSE
August 12: Paid cash for rent, $300.00.
Analyzing How Transactions Affect Owner’s Equity Accounts
RECEIVED CASH ON ACCOUNT
August 12: Received cash on account from Oakdale School, $200.00.
Analyzing How Transactions Affect Owner’s Equity Accounts
PAID CASH TO OWNER FOR PERSONAL USE
August 12. Paid cash to owner for personal use, $125.00.
Journals, Source Documents, and Recording Entries in a
JournalChecks
• Cash Payments• Check stub records the payment and maintains the checkbook balance
Journals, Source Documents, and Recording Entries in a
JournalInvoice
• Sales Invoice: Selling on account (billing)• Purchase Invoice: Buying on account
Journals, Source Documents, and Recording Entries in a
Journal
Receipt
• For Receiving Cash or Checks
Calculator Tape• For Cash Sales
Memorandum• Internal Transactions
Journals, Source Documents, and Recording Entries in a
JournalRECEIVED CASH FROM OWNER AS AN INVESTMENT
August 1: Received cash from owner as an investment, $5,000.00. Receipt No. 1.
1. Write the date in the Date column.2. Write the title of the account debited.
Write the debit amount3. Write the title of the account credited.
Write the credit amount.4. Write the source document number in
the Doc. No. column.
Journals, Source Documents, and Recording Entries in a Journal
August 4. Paid cash for insurance, $1,200.00. Check No. 2.
August 3. Paid cash for supplies, $275.00. Check No. 1.
Journals, Source Documents, and Recording Entries in a Journal
August 11. Paid cash on account to Supply Depot, $300.00. Check No. 3.
August 7. Bought supplies on account from Supply Depot, $500.00. Memo No. 1.
Journals, Source Documents, and Recording Entries in a Journal
August 12: Received cash from sales, $295.00. Tape No. 12.
1. Write the date in the Date column.2. Write the title of the account debited.
Write the debit amount.3. Write the title of the account credited.
Write the credit amount.4. Write the source document number in the
Doc. No. column.
Journals, Source Documents, and Recording Entries in a Journal
August 12: Paid cash for rent, $300.00. Check No. 4.
August 12. Sold services on account to Oakdale School, $350.00. Sales Invoice No. 1.
Journals, Source Documents, and Recording Entries in a Journal
August 12. Paid cash to owner for personal use, $125.00. Check No. 6.
August 12. Received cash on account from Oakdale School, $200.00. Receipt No. 2.
Preparing a Chart of Accounts
1. Write the account title after the word Account in the heading.
2. Write the account number after the words Account No. in the heading
Posting From a Journal to Ledger
1. Write the date.2. Write the journal page
number.3. Write the debit
amount.
4. Write the new account balance.
5. Return to the journal and write the account number.
Posting From a Journal to Ledger
1. Write the date.2. Write the journal page
number.3. Write the credit
amount.
4. Write the new account balance.
5. Return to the journal and write the account number.
Posting From a Journal to Ledger
1. Write the date.2. Write the journal page
number.3. Write the debit
amount.
4. Write the new account balance.
5. Return to the journal and write the account number.
Posting From a Journal to Ledger
1. Write the date.2. Write the journal page
number.3. Write the debit
amount.
4. Write the new account balance.
5. Return to the journal and write the account number.
Proving Cash, and Making Correcting Entries
1. Identify the checkbook balance on the most recent check stub.
2. Identify the cash account balance within the general ledger.
3. Match the two balances
Proving Cash, and Making Correcting Entries
JOURNAL ENTRY TO RECORD A CORRECTING ENTRY
November 13. Discovered that a payment of cash for advertising in October was journalized and posted in error as a debit to Miscellaneous Expense instead of Advertising Expense, $140.00. Memorandum No. 15.
Checking Accounts
COMPLETED CHECK STUB
1. Write the amount of the check.
2. Write the date of the check.
3. Write to whom the check is to be paid.
4. Record the purpose of the check.
5. Write the amount of the check.
6. Calculate the new checking account balance.
Checking Accounts
COMPLETED CHECK
1. Write the date.2. Write to whom the check
is to be paid.
3. Write the amount in figures.
4. Write the amount in words.
5. Write the purpose of the check.
6. Sign the check.
Bank Reconciliation
Bank Statement Reconciliation1. Date
2. Check Stub Balance3. Service Charge4. Adjusted Check Stub
Balance5. Bank Statement
Balance6. Outstanding
Deposits7. Subtotal8. Outstanding Checks9. Adjusted Bank
Balance10.Compare Adjusted
Balances
Bank Reconciliation
Bank Statement Reconciliation 1. Write Service Charge
$8.00 on the check stub under the heading “Other.” Check Stub Balance
2. Write the amount of the service charge in the amount column. Adjusted Bank Balance
3. Calculate and record the new subtotal on the Subtotal line.
Bank Reconciliation
JOURNALIZING A BANK SERVICE CHARGE
1. Write the date. 2. Write the title of the account debited. Record the debit
amount. 3. Write the title of the account credited. Record the
credit amount.4. Write the source document number in the Doc. No.
column.
August 31: Received bank statement showing August bank service charge, $8.00. Memorandum No. 3.
Dishonored Checks and Electronic Banking
RECORDING A DISHONORED CHECK ON A CHECK STUB
1. Write Dishonored check $105.00 on the line under the heading “Other.”
2. Write the total of the dishonored check in the amount column.
3. Calculate and record the new subtotal on the Subtotal line.
Dishonored Checks and Electronic Banking
JOURNALIZING A DISHONORED CHECK
1. Write the date. 2. Write the title and amount to be debited.3. Write the title and amount to be credited4. Write the source document number in the Doc. No.
column.
November 29. Received notice from the bank of a dishonored check from Campus Internet Café, $70.00, plus $35.00 fee; total, $105.00. Memorandum No. 55.
Dishonored Checks and Electronic Banking
September 2. Paid cash on account to Kelson Enterprises, $350.00, using EFT. Memorandum No. 10.
September 5. Purchased supplies, $24.00, using debit card. Memorandum No. 12.
Petty CashESTABLISHING A PETTY CASH FUND
August 17. Paid cash to establish a petty cash fund, $100.00. Check No. 8.
1. Write the date. 2. Write the title and amount to be debited.3. Write the title and amount to be credited4. Write the source document number in the Doc. No.
column.
Petty CashREPLENISHING A PETTY CASH FUND
August 31: Paid cash to replenish the petty cash fund, $30.00: misc. expense, $20.00; advertising, $10.00. Check No. 12
1. Write the date. 2. Write the title of the first account debited. Write the
debit amount. Write the title of the second account. Record the debit amount.
3. Write the title and amount to be credited4. Write the source document number in the Doc. No.
column.