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T Accounts
A page in the General Ledger for each account
General Ledger 101Cash
Post DebitDate Debit Credit Balance
opening balance 0.00
General Ledger 102Accounts Receivable
Post DebitDate Debit Credit Balance
opening balance 0.00
General Ledger 103Inventory
Post DebitDate Debit Credit Balance
opening balance 0.00
General Ledger 104Supplies
Post DebitDate Debit Credit Balance
opening balance 0.00
General Ledger 105Prepaid rent
Post DebitDate Debit Credit Balance
opening balance 0.00
General Ledger 151Store equipment
Post DebitDate Debit Credit Balance
opening balance 0.00
General Ledger 201Accounts payable
Post CreditDate Debit Credit Balance
opening balance 0.00
General Ledger 211Notes payable
Post CreditDate Debit Credit Balance
opening balance 0.00
General Ledger 301Owners' equity
Post CreditDate Debit Credit Balance
opening balance 0.00
General Ledger 401Sales
Post CreditDate Debit Credit Balance
opening balance 0.00
General Ledger 501Cost of goods sold
Post DebitDate Debit Credit Balance
opening balance 0.00
General Ledger 511Expense
Post DebitDate Debit Credit Balance
opening balance 0.00
“T” accounts are a poor man’s version of General Ledger accounts
the “T” corresponds to the Debit and Credit columns in the Gen Ledger account
General Ledger
Post CreditDate Debit Credit Balance
opening balance 0.00
so in accounting classes we use
we record entries in“T” accounts
rather than
actual General Ledger accounts
transactions prior to opening the store
CashDebit Credit
15,000.00
Owners EquityDebit Credit
15,000.00
CashDebit Credit
15,000.006,000.00
Prepaid RentDebit Credit
6,000.00
CashDebit Credit
15,000.006,000.00
700.00
SuppliesDebit Credit
700.00
InventoryDebit Credit
1,620.00
Accounts PayDebit Credit
1,620.00
CashDebit Credit
15,000.006,000.00
700.001,000.00
EquipmentDebit Credit
2,200.00
Notes PayableDebit Credit
1,200.00
EquipmentDebit Credit
2,200.00400.00
Account ReceiveDebit Credit
400.00
Sweet TemptationsIncome Statement
for the month ending Dec. 31, 1998
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, 1998
cash 7,300$ acc payable 1,620$ acc receivable 400 notes payable 1,200 inventory 360 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
Sweet Temptations
the STORE is open for business
CashDebit Credit
15,000.006,000.00
700.001,000.00
300.00
SalesDebit Credit
300.00
InventoryDebit Credit
1,620.00135.00
Cost of Goods SoldDebit Credit
135.00
Sweet TemptationsIncome Statement
for the period ending Jan. 2, 1999
Sales 30 300Cost of goods sold 30 135
Gross profit 165Expenses 0
Income from operations 165
Income tax expense 0
Net Income 165$
Sweet TempationsBalance Sheet
as of Jan. 2, 1999
cash 7,600$ acc payable 1,620$ acc receivable 400 notes payable 1,200 inventory 330 1,485 current liabilities 2,820 supplies 700 prepaid rent 6,000 owners' equity 15,000
current assets 16,185$ revenue 300
equipment 1,800 expense 135long-term assets 1,800$ owners' equity 15,165 #REF!assets 17,985$ liab & owner equity 17,985
CashDebit Credit
15,000.006,000.00
700.001,000.00
300.001,620.00
Accounts PayDebit Credit
1,620.001,620.00
InventoryDebit Credit
1,620.00135.00
4,320.00
Accounts PayDebit Credit
1,620.001,620.00
4,320.00
Sweet TemptationsIncome Statement
for the period ending Jan. 4, 1999
Sales 30 300Cost of goods sold 30 135
Gross profit 165Expenses 0
Income from operations 165
Income tax expense 0
Net Income 165$
Sweet TempationsBalance Sheet
as of Jan. 4, 1999
cash 5,980$ acc payable 4,320$ acc receivable 400 notes payable 1,200 inventory 1,290 5,805 current liabilities 5,520 supplies 700 prepaid rent 6,000 owners' equity 15,000
current assets 18,885$ revenue 300
equipment 1,800 expense 135long-term assets 1,800$ owners' equity 15,165 #REF!assets 20,685$ liab & owner equity 20,685
SalesDebit Credit
300.00100.00
Account ReceiveDebit Credit
400.00100.00
InventoryDebit Credit
1,620.00135.00
4,320.0045.00
Cost of Goods SoldDebit Credit
135.0045.00
Sweet TemptationsIncome Statement
for the period ending Jan. 6, 1999
Sales 40 400Cost of goods sold 40 180
Gross profit 220Expenses 0
Income from operations 220
Income tax expense 0
Net Income 220$
Sweet TempationsBalance Sheet
as of Jan. 6, 1999
cash 5,980$ acc payable 4,320$ acc receivable 500 notes payable 1,200 inventory 1,280 5,760 current liabilities 5,520 supplies 700 prepaid rent 6,000 owners' equity 15,000
current assets 18,940$ revenue 400
equipment 1,800 expense 180long-term assets 1,800$ owners' equity 15,220 #REF!assets 20,740$ liab & owner equity 20,740
Account ReceiveDebit Credit
400.00100.00
400.00
CashDebit Credit
15,000.006,000.00
700.001,000.00
300.001,620.00
400.00
CashDebit Credit
15,000.006,000.00
700.001,000.00
300.001,620.00
400.0050.00
Owners EquityDebit Credit
15,000.0050.00
CashDebit Credit
15,000.006,000.00
700.001,000.00
300.001,620.00
400.0050.00
200.00300.00
ExpensesDebit Credit
200.00300.00
CashDebit Credit
15,000.006,000.00
700.001,000.00
300.001,620.00
400.0050.00
200.00300.00200.00
EquipmentDebit Credit
2,200.00400.00
200.00
CashDebit Credit
15,000.006,000.00
700.001,000.00
300.001,620.00
400.0050.00
200.00300.00200.00
2,050.0060.00
190.00
ExpensesDebit Credit
200.00300.00
2,050.0060.00
190.00
CashDebit Credit
15,000.006,000.00
700.001,000.00
300.001,620.00
400.0050.00
200.00300.00200.00
2,050.0060.00
190.007,700.00
SalesDebit Credit
300.00100.00
7,700.00
Cost of Goods SoldDebit Credit
135.0045.00
3,465.00
InventoryDebit Credit
1,620.00135.00
4,320.0045.00
3,465.00
end of period
any adjustments to the accounting records
SuppliesDebit Credit
700.0030.00
ExpensesDebit Credit
200.00300.00
2,050.0060.00
190.0030.00
Prepaid RentDebit Credit
6,000.001,000.00
ExpensesDebit Credit
200.00300.00
2,050.0060.00
190.0030.00
1,000.00
EquipmentDebit Credit
2,200.00400.00
200.0015.00
ExpensesDebit Credit
200.00300.00
2,050.0060.00
190.0030.00
1,000.0015.00
Notes PayableDebit Credit
1,200.008.00
ExpensesDebit Credit
200.00300.00
2,050.0060.00
190.0030.00
1,000.0015.008.00
nowlet’s go back and add up
each accountand see how much we have
in each account
debits credits
cashaccounts receivableinventorysuppliesprepaid rentstore equipmentaccounts payablenotes payableowners' equitysalescost of goods soldexpenses
0 0
CashDebit Credit
15,000.006,000.00
700.001,000.00
300.001,620.00
400.0050.00
200.00300.00200.00
2,050.0060.00
190.007,700.00
11,030.00
InventoryDebit Credit
1,620.00135.00
4,320.0045.00
3,465.00
9,405.00
Account ReceiveDebit Credit
400.00100.00
400.00
100.00
debits credits
cash 11,030accounts receivable 100inventory 2,295suppliesprepaid rentstore equipmentaccounts payablenotes payableowners' equitysalescost of goods soldexpenses
13,425 0
EquipmentDebit Credit
2,200.00400.00
200.0015.00
1,985.00
Prepaid RentDebit Credit
6,000.001,000.00
5,000.00
SuppliesDebit Credit
700.0030.00
670.00
debits credits
cash 11,030accounts receivable 100inventory 2,295supplies 670prepaid rent 5,000store equipment 1,985accounts payablenotes payableowners' equitysalescost of goods soldexpenses
21,080 0
Notes PayableDebit Credit
1,200.008.00
1,208.00
Accounts PayDebit Credit
1,620.001,620.00
4,320.00
4,320.00
debits credits
cash 11,030accounts receivable 100inventory 2,295supplies 670prepaid rent 5,000store equipment 1,985accounts payable 4,320notes payable 1,208owners' equitysalescost of goods soldexpenses
21,080 5,528
ExpensesDebit Credit
200.00300.00
2,050.0060.00
190.0030.00
1,000.0015.008.00
3,853.00
Cost of Goods SoldDebit Credit
135.0045.00
3,465.00
3,645.00
SalesDebit Credit
300.00100.00
7,700.00
8,100.00
Owners EquityDebit Credit
15,000.0050.00
14,950.00
debits credits
cash 11,030accounts receivable 100inventory 2,295supplies 670prepaid rent 5,000store equipment 1,985accounts payable 4,320notes payable 1,208owners' equity 14,950sales 8,100cost of goods sold 3,645expenses 3,853
28,578 28,578
we can use theseaccount balances
to produce a trial balance
a trial balanceis nothing more than
a listing of all the accountsand
the balance in each account
debits credits
cash 11,030accounts receivable 100inventory 2,295supplies 670prepaid rent 5,000store equipment 1,985accounts payable 4,320notes payable 1,208owners' equity 14,950sales 8,100cost of goods sold 3,645expenses 3,853
28,578 28,578
We can use the balances from the trial balance
to produce financial statementsincome statement
statement of owners’ equitybalance sheet
Sweet TemptationsIncome Statement
for the month ending Jan. 31, 1999
Sales 810 8,100Cost of goods sold 810 3,645
Gross profit 4,455Expenses 3,853
Income from operations 602602Income tax expense 0
Net Income 602$
Sweet TemptationsStatement of Owners' Equity
for the month ending Jan. 31, 1999
Owners' equity @ 12/31/98 15,000Net income 602less distributions 50Owners' equity @1/31/99 15,552$
Sweet TempationsBalance Sheet
as of Jan. 31, 1999
cash 11,030$ acc payable 4,320$ acc receivable 100 notes payable 1,208 inventory 510 2,295 current liabilities 5,528 supplies 670 prepaid rent 5,000
current assets 19,095$
equipment 1,985 long-term assets 1,985$ owners' equity 15,552 #REF!assets 21,080$ liab & owner equity 21,080
