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7/27/2019 Double Entry Bookkeeping - T-Accounts
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Principles Of AccountingPrinciples of Accounting Made Easy
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Accounting Balance Sheet Debit Credit Lines of Credit
Double Entry Bookkeeping
what is double entry bookkeeping? (double entry accounting)
The basis of accounting system is the double entry bookkeeping system. This involves making two
entries in the accounts for each transaction. These accounts are kept in ledgers.
T- account:
T-Accounts are the basic storage units for accounting data and are used to accumulate amounts from
similar transactions. An accounting system has a separate account for each asset, each liability, and
owners equity.
A T-account is divided into two sides by the center line. The left-hand side is the DEBIT side (usually
abbreviated to Dr.) and the right-hand side is the credit side (usually abbreviated to Cr.) On each side
there are columns in which to record the date, details and amounts of each transaction.
Because of the dual nature of every transaction, two entries are made a debit in one account and a
credit in another account.
Double Entry Rule:
The two rules of the double-entry system are that every transaction affects at least two accounts and
that total debits must equal total credits. In other words, for every transaction, one or more accounts
must be debited and one or more accounts must be credited.
Note: Today most businesses, except the very smallest, use computers to handle their accounting data.
Accounts are not kept in the traditional form- T- account , but are kept in what is called Running
balance style-computerised accounting system
Example of T- account: 1
Jason started a business on 1 April 2005. His transactions for the first month of trading were as follows.
Complete the following table by stating the account to be debited and credited.
Double Entry Records for Purchases, Sales & Returns
Though the same goods which are purchased for resale are later sold by the business, it is necessary to
record them in separate accounts as the purchases will be at cost price and the sales at selling price. A
purchases account and a sales account are used rather than a single goods account. An Inventory
account is only used to record the goods left at the end of the financial year and not for day-to-day
transactions.
Purchases:
(a) Goods purchased by cash or cheque:
DEBIT Purchases Account
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Date Transaction Account debited Account credi
April 1Jason introduced capital of $40,000. This was paid into
the business bank account
Apri l 2 Purchased premises, $25000, by cheque.
April 10 Purchased Furniture on credit from Oak products.
April 24 Paid Lynne, a creditor, $8000 by cheque
April 25Jason brought in a private motor van into the business
worth $ 5,000
April 27Received a long term loan, $10,000, by cheque from
ABC Finance
April 30 Received $ 2400 from Kite, a debtor, in cash
Page 1 of 4Double Entry Bookkeeping - T-Accounts
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DOUBLE ENTRY:
DEBIT Carriage inwards or Carriage outwards Account
CREDIT Cash or Bank Account
Double Entry Records for Drawings
Whenever the owner of a business takes value from the business for his/ her own use, this is known as
drawings. This value may be in the form of money, non-current assets, or goods from the stock held by
the business.
Drawings reduce the capital of the business. A separate account called drawings account is opened to
record any value taken from the business for own use, so that the capital account does not have a large
number of entries.
DOUBLE ENTRY
DEBIT Drawing Account
CREDIT Cash or Bank Account
DEBIT Drawing Account
CREDIT Purchase Account.
DEBIT Drawing Account
CREDIT Appropriate non-currentassetAccount.
(3)Complete the following table by stating the account to be debited and credited.
4) Jason started a business on 1 April 2005. His transactions for the first month of trading were asfollows. Complete the following table by stating the account to be debited and credited.
Carriage outwards occurs when a business pays for goods to be delivered to the customers
premises. It is a selling expense.This is also referred as Carriage on Sales.
When money is withdrawn:
When goods are withdrawn:
When a non-current asset is withdrawn:
Transaction Account debited Account credi
a)Owner paid for home utilities of $300 using a business
cheque.
b) Bought goods on credit from Darryl, $ 6500
c) Paid $3000 of rent by cheque.
d) Sold goods on credit to Nancy, $ 5600
e)Paid $80 in cash for the carriage of goods purchased from
Darryl
f) Returned $500 of stock to supplier, Darryl.
g)Received cheque of $2800 from a debtor, Nancy, in half
settlement of his account.
Date Transaction Account debited Account credi
April 1Jason introduced capital of $40,000. This was paid into
the business bank account
Apri l 2 Purchased premises, $25000, by cheque.
April 4 Purchased goods , $9500, on credit from Lynne
April 6 Cash sales, $320
April 9 Paid general expenses , $250, in cash
April 12 Sold goods , $1460, on credit to Paul
April 12 Paid $10, in cash, for carriage on sales
April 15 Paul returned goods, $120
April 20 Jason took goods, $100, for his own use
April 24 Paid Lynne, $8000, by cheque
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Jason started a business on 1 April 2005. His transactions for the first month of trading were as follows.
Complete the following table by stating the account to be debited and credited.
1) Mona started a business on 1 January 2011. The following are her transactions for the first two
weeks of trading.
Jan 1 Capital, $20000, was paid into a business bank account
1 Paid rent, $500, by cheque.
2 Bought goods, $3300,on credit from Mohamed
4 Returned goods, $100, to Mohamed
7 Sold goods, $1700, on credit to Aswan Traders
9 Received $120 commission in cash
10 Paid Mohamed$3000 by cheque on account.
12 Aswan Traders paid $1000 by cheque.
13 Paid sundry expenses in cash $20.
14 Cash sales, $1500
14 Cash withdrawn for personal use, $500
1) Mona started a business on 1 January 2011. The following are her transactions for the first two
weeks of trading.
Jan 1 Capital, $20000, was paid into a business bank account
1 Paid rent, $500, by cheque.
2 Bought goods, $3300, on credit from Mohamed
4 Returned goods, $100, to Mohamed
7 Sold goods, $1700, on credit to Aswan Traders
9 Received $120 commission in cash
10 Paid Mohamed $3000 by cheque on account.
12 Aswan Traders paid $1000 by cheque.
13 Paid sundry expenses in cash $20.
14 Cash sales, $1500
14 Cash withdrawn for personal use, $500
This is the end ofdouble entry accounting. Now you must be familiar with double entry
bookkeeping.Please proceed to the next topic form the navigation bar.
Incoming search terms:
April 27Received a long term loan, $10,000, by cheque from
ABC Finance
April 30 Paid assistants wages in cash, $200
Date Transaction Account debited Account credi
April 1Jason introduced capital of $40,000. This was paid into
the business bank account
Apri l 2 Purchased premises, $25000, by cheque.April 10 Purchased Furniture on credit from Oak products.
April 24 Paid Lynne, a creditor, $8000 by cheque
April 25Jason brought in a private motor van into the business
worth $ 5,000
April 27Received a long term loan, $10,000, by cheque from
ABC Finance
April 30 Received $ 2400 from Kite, a debtor, in cash
carriage outwards double entry
carriage inwards double entry
what are the accounting entries carriage inwards
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