1. Recording Transactions in a General Journal

2.  Explain the first three steps in the accounting cycle.  Give and describe several examples of source documents.  Explain the purpose of journalizing.  Apply information from source documents.  Describe the steps to make a general journal entry.  Make general journal entries.  Correct errors in general journal entries.  Define the accounting terms introduced in this chapter.

3. Every transaction you have with a business is documented in some way. Companies keep permanent records of transactions.

5.  1995 They were students at Stanford University when they met. (Web search technology)  1998 the company Google Inc. was started in a garage. ◦ The site performed about 10,000 searches a day. ◦ In 2 ½ yrs, it grew to 100 million.  Today, Google is the top Internet search engine.  The company takes in billions of dollars in advertising each year. ◦ That means, they keep their accountants busy with the business activities. Larry PageSergey Brin

6. If you were just starting an Internet company, what types of financial information would you record?  Sell advertising  Invests in computer equipment  Pays software engineers

7.  Have you every kept a daily journal of the things that happen during your day?  Diary?  Where are the daily financial happenings are recorded  General Journal

8. The Steps in the accounting cycle The accounting cycle is a series of steps done in each accounting period to keep records in an orderly fashion The different types of accounting periods  

9.  Accounting cycle  Source document  Invoice  Receipt  Memorandum  Check stub  Journal  Journalizing  Fiscal year  Calendar year

10. The First 3 Steps Step 1: Collect and verify source documents. Step 2: Analyze each transaction. Step 3: Journalize each transaction. The accounting period of a business that is separated into activities.

11.  Invoice  Receipt  Memorandum  Check Stub When a business transaction occurs, a paper is prepared as evidence of that transaction.

12.  Invoice  Receipt  Memorandum  Check Stub

13.  Invoice  Receipt  Memorandum  Check Stub

14.  Invoice  Receipt  Memorandum  Check Stub

15. Analyze the information on the source documents to determine the debit and credit parts. What do you already know? Analyze business transactions using the rules of debit and credit You were given a description of each transaction such as: Roadrunner Delivery Service bought a computer system from Info-Systems Inc. for 43,000 and issued Check 101.

16.  Record the debit and credit amounts in the Journal.  (Journalizing)  Journals are kept in chronological order, that is, the order in which the transactions occur. A record of the transactions of a business. The process of recording business transactions in a journal

17. ACCOUNTING PERIOD Fiscal Year An accounting period of 12 months Calendar Year Begins: January 1 Ends: December 31

18. 1 What is the name of the company providing the service or merchandise? Jaymax Office Supply 2 What is the name of the business receiving the service or merchandise? Dario’s Accounting Services 3What is the date of the invoice?April 9, 2012 4What is the invoice number?479 5What item was sold?Fax Machine 6What is the price for this item?$299.00 7What are the payment terms?Payable in 30 days

19. Step 1Date of TransactionD Step 2Name of the Account DebitedF Step 3Amount of the DebitE Step 4Name of the Account CreditedB Step 5Amount of the CreditA Step 6Source Document ReferenceC

20. TransAccount Classification AccountGeneral Journal IncreaseDecreaseDebitCredit 1 Passenger VanAsset  Cash in BankAsset  2 Utilities ExpenseExpense  Cash in BankAsset  3 Cash in BankAsset  Day-Care FeesRevenue 

22. It is an all-purpose journal in which all of the transactions of a business may be recorded.

23. #1 Date of transaction GENERAL JOURNAL PAGE____ 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 Year 2 Month Day Account Name to be Debited 22 00000 3 Account Name to be Credited 22 00000 4 Explanation 5 #2 Name of the account to be Debited #3 Debit Amount #4 Name of the account to be Credited #6 Source document reference or an explanation #5 Credit Amount

24. BUSINESS TRANSACTION ANALYSES: Steps to Success 1.Identify the accounts affected 2.Determine the amount of increase or decrease for each account affected. 3.Which account is debited? For what amount? 4.Which account is credited? For what amount? 5.What is the complete entry in T-Account Form 6.Record in the General Journal Form.

25. GENERAL JOURNAL PAGE __1__ 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 2012 2 3 4 Cash in Bank Debit 25,000 Credit Maria Sanchez, Capital DebitCredit 25,000 Oct1Cash in Bank Maria Sanchez, Capital Memorandum 1 25 00000 25 00000 Roadrunner Delivery Service 155 Gateway Blvd. Sacramento, CA 94230 MEMORANDUM 1 TO: Accounting Clerk FROM: Maria Sanchez DATE: October 1, 2012 SUBJECT: Contributed Personal Funds to the Business I have contributed $25,000.00 from my personal savings for a deposit to the business, Roadrunner Deliverly Service.

26. GENERAL JOURNAL PAGE 1 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 2012 4 5 6 7 Office Equipment Debit 400.00 Credit Maria Sanchez, Capital DebitCredit 400.00 2 Office Equipment Maria Sanchez, Capital 40000 40000 Memorandum 2 Roadrunner Delivery Service 155 Gateway Blvd. Sacramento, CA 94230 MEMORANDUM 2 TO: Accounting Clerk FROM: Maria Sanchez DATE: October 2, 2012 SUBJECT: Contributed Personal Phones I have contributed two telephones from my home to the business. The phones are valued at $200 each. Total contribution = $400.

27. GENERAL JOURNAL PAGE 1 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 2012 4 8 9 10 Computer Equipment Debit 3,000.00 Credit Cash in Bank DebitCredit 3,000.00 4 Computer Equipment Cash in Bank Check 101 $ 3,000.00 No. 101 Date October 4, 2012 To Info-Systems Inc. For Computer Dollars Cents Balance brought forward25,00000 Add deposits Total25,00000 Less this check3,00000 Balance carried forward22,00000 3 00000 3 00000

28. GENERAL JOURNAL PAGE 1 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 2012 10 11 12 13 Delivery Equipment Debit 12,000.00 Credit Accounts Payable – North Shore Auto DebitCredit 13,000.00 9 Delivery Equipment Accts. Pay—North Shore Auto Invoice 200 12 00000 12 00000 North Shore Auto 440 Lake Drive Sacramento, CA 94230 INVOICE NO. 200 TO: Roadrunner Delivery Service 155 Gateway Blvd. Sacramento, CA 94230 DATE: ORDER NO: SHIPPED BY: TERMS: October 9, 2012 99674 n/a Installment QTYITEMUNIT PRICETOTAL 1Dodge Truck Used$ 12,000.00

29. GENERAL JOURNAL PAGE 1 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 2012 13 14 15 16 Accounts Receivable—Green Company Debit 200.00 Credit Office Equipment DebitCredit 200.00 11 Accts. Rec.—Green Company Office Equipment Memorandum 3 20000 20000 Roadrunner Delivery Service 155 Gateway Blvd. Sacramento, CA 94230 MEMORANDUM 3 TO: Accounting Clerk FROM: Maria Sanchez DATE: October 11, 2012 SUBJECT: Sold Telephone Sold one telephone on account to Green Company for $200.00.

30. GENERAL JOURNAL PAGE 1 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 2012 16 17 18 19 Accounts Payable—North Shore Auto Debit 350.00 Credit Cash in Bank DebitCredit 350.00 12 Accts. Pay.—North Shore Auto Cash in Bank Check 102 $ 350.00 No. 102 Date October 12, 2012 To North Shore Auto For Installment on Truck Dollars Cents Balance brought forward22,00000 Add deposits Total22,00000 Less this check35000 Balance carried forward21,65000 35000 35000

31. GENERAL JOURNAL PAGE 1 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 2012 22 23 24 25 Cash in Bank Debit 200.00 Credit Accts. Rec.—Green Company DebitCredit 200.00 14 Cash in Bank Accts. Rec.—Green Company Receipt 1 20000 20000 Roadrunner Delivery Service 155 Gateway Blvd. Sacramento, CA 94230 RECEIPT No. 1 October 14, 2012 RECEIVED FROM Green Company $200.00 Two hundred and no/100 ------------------------------------------------------------ DOLLARS RECEIVED BY __ Maria Sanchez___

32. GENERAL JOURNAL PAGE 1 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 2012 22 23 24 25 Cash in Bank Debit 1,200.00 Credit Delivery Revenue DebitCredit 1,200.00 15 Cash in Bank Delivery Revenue Receipt 2 1 20000 1 20000 Roadrunner Delivery Service 155 Gateway Blvd. Sacramento, CA 94230 RECEIPT No. 2 October 15, 2012 RECEIVED FROM Sims Corporation $ 1,200.00 One thousand two hundred and no/100 ------------------------------------------------- DOLLARS RECEIVED BY __ Maria Sanchez___

33. GENERAL JOURNAL PAGE 1 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 2012 25 26 27 28 Rent Expense Debit 700.00 Credit Cash in Bank DebitCredit 700.00 16 Rent Expense Cash in Bank Check 103 $ 700.00 No. 103 Date October 16, 2012 To Tooley & C0. Management For Rent Dollars Cents Balance brought forward21,65000 Add deposits 10/1420000 10/151,20000 Total23,05000 Less this check70000 Balance carried forward22,35000 70000 70000

34. GENERAL JOURNAL PAGE 1 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 2012 28 29 30 31 Advertising Expense Debit 75.00 Credit Accounts Payable – Beacon Advertising DebitCredit 75.00 18 Advertising Expense Accts. Pay—Beacon Advertising Invoice 129 7500 7500 Beacon Advertising 10200 Prairie Parkway Sacramento, CA 94230 INVOICE NO. 129 TO: Roadrunner Delivery Service 155 Gateway Blvd. Sacramento, CA 94230 DATE: ORDER NO: SHIPPED BY: TERMS: October 18, 2012 699 n/a Payable in 30 days QTYITEMUNIT PRICETOTAL 1PrintAd$ 75.00

35. GENERAL JOURNAL PAGE 1 12 DATEDESCRIPTION POST. REF. DEBITCREDIT 1 2012 31 32 33 34 Accounts Receivable—City News Debit 1,450.00 Credit Delivery Revenue DebitCredit 1,450.00 20 Accts. Rec.—City News Delivery Revenue Sales Invoice 1 1 45000 1 45000 Roadrunner Delivery Service 155 Gateway Blvd. Sacramento, CA 94230 SALES INVOICE NO. 1 TO: City News 10900 Main Stree Sacramento, CA 94230 DATE: ORDER NO: SHIPPED BY: TERMS: October 20, 2012 300 n/a Payable in 30 days QTYITEMUNIT PRICETOTAL 1Delivery Services$ 1,450.00