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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 Cash1,200 Office Equip100 Rolo Kern, Capital1,300

6 Paid rent 3 months in advance $300 DateDescriptionDebitCredit Prepaid Rent300 Cash300

7 Purchased Office Equip on Account $50 DateDescriptionDebitCredit Office Equip50 Accounts Payable50

8 Purchased Office Supplies for Cash $40 DateDescriptionDebitCredit Office Supply40 Cash40

9 Collected $400 in cash for services Rendered DateDescriptionDebitCredit Cash400 Revenues400

10 Paid Home Electric Bill from Company Funds $20 DateDescriptionDebitCredit Kern, Withdrawl20 Cash20

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

12 Paid wages $60 DateDescriptionDebitCredit Wage Expense60 Cash60

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

14 Balances as of (Before Adjustments) DateDescriptionDebitCredit Cash1,180 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 (Before Adjustments) DateDescriptionDebitCredit Revenues500 Wage Expense60 Advertising Expense70

16 Adjusting Entry Office Supplies on hand total $6 DateDescriptionDebitCredit Supply Expense34 Office Supplies34

17 Adjusting Entry Rent Expense For Month $100 DateDescriptionDebitCredit Rent Expense100 Prepaid Rent100

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

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

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

21 Income Stmt & Balance Sheet as of (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, ,6561,490 Net Income166 Totals1, ,656


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