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Journal and Adjusting Entries
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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
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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
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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
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Rolon Kern Invested $1,200 in cash and $100 in Office Supplies to start Company
Date Description Debit Credit 1-2-04 Cash 1,200 Office Equip 100 Rolo Kern, Capital 1,300
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Paid rent 3 months in advance $300
Date Description Debit Credit 1-2-04 Prepaid Rent 300 Cash
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Purchased Office Equip on Account $50
Date Description Debit Credit 1-4-04 Office Equip 50 Accounts Payable
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Purchased Office Supplies for Cash $40
Date Description Debit Credit 1-6-04 Office Supply 40 Cash
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Collected $400 in cash for services Rendered
Date Description Debit Credit 1-8-04 Cash 400 Revenues
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Paid Home Electric Bill from Company Funds $20
Date Description Debit Credit Kern, Withdrawl 20 Cash
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Provides services for $100, client will pay next month
Date Description Debit Credit Account Receivable 100 Revenues
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Paid wages $60 Date Description Debit Credit 1-16-04 Wage Expense 60
Cash
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Placed ad for $70, will pay next month
Date Description Debit Credit Advertising Expense 70 Accounts Payable
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Balances as of 1-31-07 (Before Adjustments)
Date Description Debit Credit Cash 1,180 Accounts Receivable 100 Pre-paid Rent 300 Office Supplies 40 Office Equip 150 Account Payable 120 Kern, Capital 1,300 Kern, Withdrawl 20 Revenues 500 Wage Expense 60 Advertising Expense 70 Totals 1,920
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Balances as of 1-31-07 (Before Adjustments)
Date Description Debit Credit Revenues 500 Wage Expense 60 Advertising Expense 70
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Adjusting Entry Office Supplies on hand total $6
Date Description Debit Credit Supply Expense 34 Office Supplies
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Adjusting Entry Rent Expense For Month $100
Date Description Debit Credit Rent Expense 100 Prepaid Rent
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Adjusting Entry Office Equip Depr $20
Date Description Debit Credit Depreciation Expense 20 Accum Depr - Equip
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Adjusting Entry Owe Employees $50 at end of month
Date Description Debit Credit Wage Expense 50 Wages Payable
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Balances as of 1-31-07 (After Adjustments)
Description TB Debit TB Credit ADJ Debit ADJ Credit ATB Debit ATB Credit Cash 1,180 Accounts Receivable 100 Pre-paid Rent 300 200 Office Supplies 40 34 6 Office Equip 150 Accum Depr – Equip 20 Account Payable 120 Wages Payable 50 Kern, Capital 1,300 1300 Kern, Withdrawl Revenues 500 Wage Expense 60 110 Depreciation Exp Rent Expense Office Supply Expense Advertising Expense 70 Totals 1,920 204 1,990
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Income Stmt & Balance Sheet as of 1-31-07 (After Adjustments)
Description ATB Debit Credit INC Debit Stmt Credit Balance Sheet Cash 1,180 Accounts Receivable 100 Pre-paid Rent 200 Office Supplies 6 Office Equip 150 Accum Depr – Equip 20 Account Payable 120 Wages Payable 50 Kern, Capital 1,300 Kern, Withdrawl Revenues 500 Wage Expense 110 Depreciation Exp Rent Expense Office Supply Expense 34 Advertising Expense 70 Totals 1,990 334 1,656 1,490 Net Income 166
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