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Journal and Adjusting Entries. Rules To Remember Accounts are not your checking or saving accounts They are storage devices for your financial transactions.

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Presentation on theme: "Journal and Adjusting Entries. Rules To Remember Accounts are not your checking or saving accounts They are storage devices for your financial transactions."— Presentation transcript:

1 Journal and Adjusting Entries

2 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

3 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

4 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

5 Rolon Kern Invested $1,200 in cash and $100 in Office Supplies to start Company DateDescriptionDebitCredit 1-2-04Cash1,200 Office Equip100 Rolo Kern, Capital1,300

6 Paid rent 3 months in advance $300 DateDescriptionDebitCredit 1-2-04Prepaid Rent300 Cash300

7 Purchased Office Equip on Account $50 DateDescriptionDebitCredit 1-4-04Office Equip50 Accounts Payable50

8 Purchased Office Supplies for Cash $40 DateDescriptionDebitCredit 1-6-04Office Supply40 Cash40

9 Collected $400 in cash for services Rendered DateDescriptionDebitCredit 1-8-04Cash400 Revenues400

10 Paid Home Electric Bill from Company Funds $20 DateDescriptionDebitCredit 1-12-04Kern, Withdrawl20 Cash20

11 Provides services for $100, client will pay next month DateDescriptionDebitCredit 1-14-04Account Receivable 100 Revenues100

12 Paid wages $60 DateDescriptionDebitCredit 1-16-04Wage Expense60 Cash60

13 Placed ad for $70, will pay next month DateDescriptionDebitCredit 1-18-04Advertising Expense70 Accounts Payable70

14 Balances as of 1-31-07 (Before Adjustments) DateDescriptionDebitCredit 1-31-07Cash1,180 Accounts Receivable100 Pre-paid Rent300 Office Supplies40 Office Equip150 Account Payable120 Kern, Capital1,300 Kern, Withdrawl20 Revenues500 Wage Expense60 Advertising Expense70 Totals1,920

15 Balances as of 1-31-07 (Before Adjustments) DateDescriptionDebitCredit 1-31-07Revenues500 Wage Expense60 Advertising Expense70

16 Adjusting Entry Office Supplies on hand total $6 DateDescriptionDebitCredit 1-31-07Supply Expense34 Office Supplies34

17 Adjusting Entry Rent Expense For Month $100 DateDescriptionDebitCredit 1-31-07Rent Expense100 Prepaid Rent100

18 Adjusting Entry Office Equip Depr $20 DateDescriptionDebitCredit 1-31-07Depreciation Expense20 Accum Depr - Equip20

19 Adjusting Entry Owe Employees $50 at end of month DateDescriptionDebitCredit 1-31-07Wage Expense50 Wages Payable50

20 Balances as of 1-31-07 (After Adjustments) DescriptionTB Debit TB Credit ADJ Debit ADJ Credit ATB Debit ATB Credit Cash1,180 Accounts Receivable100 Pre-paid Rent300100200 Office Supplies40346 Office Equip150 Accum Depr – Equip20 Account Payable120 Wages Payable50 Kern, Capital1,3001300 Kern, Withdrawl20 Revenues500 Wage Expense6050110 Depreciation Exp20 Rent Expense100 Office Supply Expense34 Advertising Expense70 Totals1,920 204 1,990

21 Income Stmt & Balance Sheet as of 1-31-07 (After Adjustments) DescriptionATB Debit ATB Credit INC Debit Stmt Credit Balance Debit Sheet Credit Cash1,180 Accounts Receivable100 Pre-paid Rent200 Office Supplies66 Office Equip150 Accum Depr – Equip20 Account Payable120 Wages Payable50 Kern, Capital1,300 Kern, Withdrawl20 Revenues500 Wage Expense110 Depreciation Exp20 Rent Expense100 Office Supply Expense34 Advertising Expense70 Totals1,990 3345001,6561,490 Net Income166 Totals1,990 500 1,656


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