1. The Accounting Cycle
The accounting period of a business is separated into activities that help the business keep its accounting records in order.
These activities are called the Accounting Cycle. 2
Analyze
each
transaction 2
Analyze
each
transaction 3
Journalize
each
transaction 3
Journalize
each
transaction 1
Collect
and verify
source
documents 1
Collect
and verify
source
documents 4
Post to the
ledger 9
Prepare a
post-closing
trial
balance 5
Prepare a
trial
balance 8
Journalize
and post
closing
entries 6
Prepare a
worksheet 7
Prepare
financial
statements

2. Source Documents
A Source Document provides evidence that a transaction has taken place.
There are 4 basic types of Source Documents that we will be using.
Invoice
Indicates that money is owed.
Check Stub
Indicates that a check has been issued.
from your company
to your company
Accounts
Receivable
Accounts
Payable
Credit
Cash
Receipt
Indicates that money has been paid.
Memorandum (memo)
Written message describing a transaction
from your company
to your company
Debit
Cash
Credit
Cash
Various

3. Source Document Examples
(4)
Invoice
(1)
(3)
(1)
(4)
(3)
(2)
Receipt
(2)
(6)
(5)
(6)
(5)
(1) Name of company providing service
(2) Name of company receiving service
(1) Name of company providing service
(3) Date of receipt
(2) Name of company receiving service
(4) Receipt number
(3) Date of invoice
(1)
(2)
(5) Service provided
(3)
(4) Invoice number
(4)
Memo
(5) Amount received
(5)
(5) Item sold/bought
(5) Price of item
(1)
(2)
(1) Amount of check
(3)
(2) Check number
Check
Stub
(3) Date check was written
(1) Memo number
(4) Name of company being paid
(2) Date of memo
(5) Purpose of check
(3) Description of transaction

4. Homework
Problem 6-1
Textbook Page: 125
Do on Loose-Leaf Paper

5. Recording Transactions in a General Journal
Let’s take a look at a sample General Journal and the steps to journalizing a transaction.
1) Date of Transaction
3) Amount of the Debit
2) Name of Account Debited
Year
Month
Day
Debited Account Name
3 0 0
Credited Account Name
3 0 0
Source Document
4) Name of Account Credited
5) Amount of the Credit
6) Source Document Reference

6. Investments by the Owner
Business Transaction 1
On October 1 Maria Sanchez took $25,000 from her personal savings and deposited that amount to open a business account in the name of Roadrunner Delivery Service, Memo 1.
Business Transaction 2
On October 2 Maria Sanchez, took two telephones valued at $200 each (total $400) from her home and transferred them to the business as Office Equipment, Memo 2. 1
2014
Oct 1
Cash in Bank
M. Sanchez, Capital
Memo 1 2
Office Equipment
4 0 0
M. Sanchez, Capital
4 0 0
Memo 2

7. Purchase Transactions
Business Transaction 3
On October 4 Roadrunner issued check 101 for $3,000 to buy a computer system.
Business Transaction 4
On October 9 Roadrunner bought a used truck on account from North Shore Auto for $12,000, Invoice 200. 1 4
Computer Equipment
Cash in Bank
Check 101 9
Delivery Equipment
Accts Payable – North Shore Auto
Invoice 200

8. Miscellaneous Transactions
Business Transaction 5
On October 11 Roadrunner sold one telephone to Green Company for $200 on account, Memo 3
Business Transaction 6
On October 12 Roadrunner mailed check 102 for $350 as the first installment payment on the truck purchased from North Shore Auto on October 9.
Business Transaction 7
On October 14 Roadrunner received and deposited a check for $200 from Green Company. The check was full payment for the telephone sold, Receipt 1 1 11
Accts Rec – Green Company
2 0 0
Office Equipment
2 0 0
Memo 3 12
Accts Payable – North Shore Auto
3 5 0
Cash in Bank
3 5 0
Check 102 14
Cash in Bank
2 0 0
Accts Rec – Green Company
2 0 0
Receipt 1

9. Revenue & Expense Transactions
Business Transaction 8
On October 15 Roadrunner provided delivery services for the Sims Corporation. A check for $1,200 was received in full payment, Receipt 2.
Business Transaction 9
On October 16 Roadrunner mailed check 103 for $700 to pay the rent for the month . 1 15
Cash in Bank
Delivery Revenue
Receipt 2 16
Rent Expense
7 0 0
Cash in Bank
7 0 0
Check 103

10. More Revenue & Expense Transactions
Business Transaction 10
On October 18 Beacon Advertising prepared an advertisement for Roadrunner. Roadrunner will pay Beacon’s $75 fee later, Invoice 129.
Business Transaction 11
On October 20 Roadrunner provided delivery services to City News. Roadrunner billed City News $1,450, Sales Invoice 1. 1 18
Advertising Expense
7 5
Accts Pay – Beacon Advertising
7 5
Invoice 129 20
Accts Receivable – City News
Delivery Revenue
Sales Invoice 1
I only have 2 lines left, but I need 3 lines to record a transaction.

11. Even More Revenue & Expense Transactions
Business Transaction 12
On October 28 Roadrunner paid a $125 telephone bill with check 104 .
Business Transaction 13
On October 29 Roadrunner wrote check 105 for $600 to have the office repainted .
Business Transaction 14
On October 31 Maria Sanchez wrote check 106 to withdraw $500 cash for personal use . 2
2014
Oct 28
Utilities Expense
1 2 5
Cash in Bank
1 2 5
Check 104 29
Maintenance Expense
6 0 0
Cash in Bank
6 0 0
Check 105 31
M. Sanchez, Withdrawals
5 0 0
Cash in Bank
5 0 0
Check 106

12. Homework Textbook Page: 140 Workbook Page: 66
Problem 6-2 & Problem 6-3

13. Problem 6-4 T – P. 145 W – P. 67 Wilderness Rentals Chart of Accounts
101 Cash in Bank
105 A/R – Helen Katz
110 A/R – Polk & Co.
120 Office Equipment
125 Camping Equipment
201 A/P – Adventure Equipment Inc.
203 A/P – Digital Tech Computers
205 A/P – Greg Mollaro
301 Ronald Hicks, Capital
305 Ronald Hicks, Withdrawals
310 Income Summary
401 Equipment Rental Income
501 Advertising Expense
505 Maintenance Expense
515 Rent Expense
520 Salaries Expense
525 Utilities Expense

14. Jan 1
Wrote Check 310 for the part-time secretary’s salary, $270. 3
Bought $2,000 of camping equipment on account from Adventure Equipment Inc., Invoice 320 5
Received $500 from a client for equipment rental, Receipt 150. 7
Wrote Check 311 to pay the electricity bill of $110. 11
Billed a client, Polk and Co., $1,700 for rental equipment, Sales Invoice 262 12
Ronald Hicks withdrew $800 for personal use, Check 312 14
Bought a $300 scanner for the office computer from Digital Tech Computers, on account, Invoice 270.

15. 16
Wrote Check 313 for $1,000 as an installment payment toward the amount owed to Adventure Equipment Inc. 25
Received $1,700 from Polk and Co. in payment on their account, Receipt 151. 30
Paid Digital Tech Computers $300 for the amount owed, check 314.
That was easy

16. Homework
Textbook Page: 146
Workbook Page: 68
Problem 6-5

17. Prob 6-6 7
Jan 1
Received $125 for boarding a client’s dog for one week, Receipt 300.
2016
JAN 1
Cash in Bank
1 2 5
Boarding Revenue
1 2 5 3
Abe Shultz contributed to the business a computer valued at $2,500, Memo 33.
Receipt 300 3
Computer Equipment
Abe Schultz, Capital
Memo 33 5
Billed a client, Juan Alvarez, $80 for grooming his pets, Sales Invoice 212. 5
Accts Rec – Juan Alvarez
8 0
Grooming Revenue
8 0
Sales Invoice 212 9
Utilities Expense
1 5 0 9
Wrote Check 411 to Allegheny Power Co. for $150 in payment fro the month’s electricity bill.
Cash in Bank
1 5 0
Check 411 11
Abe Schultz, Withdrawals
7 0 0
Cash in Bank
7 0 0
Check 412 11
Abe Schultz withdrew $700 for personal use, Check 412. 14
Kennel Equipment
Accts Payable – Dogs & Cats Inc
Invoice DC92 14
Purchased kennel equipment for $2,600 from Dogs & Cats inc., on account, Invoice DC92. 16
Salaries Expense
4 0 0
Cash in Bank
4 0 0
Check 413 16
Paid the part-time receptionist’s salary of $400 by issuing Check 413.

18. That was easy Prob 6-6 Con’t 187
2016
JAN 1 18
Abe Shultz took from the business for his personal use a ten-key adding machine valued at $65, Memo 34.
Cash in Bank
1 2 5
Boarding Revenue
1 2 5
Receipt 300 3
Computer Equipment
Abe Schultz, Capital
Memo 33 23
Juan Alvarez sent a check for $80 in full payment of his account, Receipt 301. 5
Accts Rec – Juan Alvarez
8 0
Grooming Revenue
8 0
Sales Invoice 212 9
Utilities Expense
1 5 0
Cash in Bank 28
Purchased on credit $250 in grooming equipment from the Pet Gourmet, Invoice PG333.
1 5 0
Check 411 11
Abe Schultz, Withdrawals
7 0 0
Cash in Bank
7 0 0
Check 412 31
Issued Check 414 for $1,300 as an installment payment for the amount owed to Dogs & Cats Inc. 14
Kennel Equipment
Accts Payable – Dogs & Cats Inc
Invoice DC92 16
Salaries Expense
4 0 0
Cash in Bank
4 0 0
Check 413 18
Abe Schultz, Withdrawals
6 5
Office Equipment
6 5
Memo 34 23
Cash in Bank
8 0
Accts Rec – Juan Alvarez
8 0
Receipt 301 28
Grooming Equipment
2 5 0
Accts Payable – Pet Gourmet
2 5 0
Invoice PG333 30
Accts Payable – Dogs & Cats Inc
Cash in Bank
That was easy
Check 414

19. Homework
Textbook Page: 148
Workbook Page: 70
Problem 6-7

20. Problem 6-8 Wkbk Pages
Greg Failla operates Showbiz Video. The following accounts are used record business transactions.
101
105
110
113
115
130
135
140
145
150
201
205
207
209
Cash in Bank
Accounts Receivable - G. Cohen
Accounts Receivable – J. Coletti
Accounts Receivable - S. Flannery
Accounts Receivable – Spring Branch
School District
Office Equipment
Office Furniture
Computer Equipment
Video Tapes
Video Equipment
Accounts Payable – Broad Street
Office Supply
Accounts Payable – Computer Horizons
Accounts Payable – New Media Supply
Accounts Payable – Palace Films
301
305
310
401
405
501
505
510
520
525
530
G. Fallia, Capital
G. Fallia, Withdrawals
Income Summary
Video Rental Revenue
VCR Rental Revenue
Advertising Expense
Equipment Repair Expense
Maintenance Expense
Rent Expense
Salaries Expense
Utilities Expense

21. Use source documents on pages 71 – 73 to record transactions.
Homework
Workbook Page:
Problem 6-8
Use source documents on pages 71 – 73 to record transactions.