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Chapter 5 $ Accounting Bellwork

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1 Chapter 5 $ Accounting Bellwork 3rd Hour: List the permanent accounts and the temporary capital accounts. $ $ $

2 Susan Rucker December 5, 2018 Bellwork
Permanent Accounts: Assets Liabilities Owners Equity Temporary Capital Accounts Revenue Expenses Withdrawals

3 Plans for today. Grade Ch5-1 Homework Complete Ch5-2 Assignment

4 Chapter 5 $ Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions $ $ What You’ll Learn How to analyze transactions that affect revenue, expense, and withdrawals accounts $

5 $ $ $ $ Why It’s Important Key Terms Chapter 5 revenue recognition
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Why It’s Important You need to analyze revenue, expense, and owner’s withdrawal transactions to record them correctly. $ $ $ Key Terms revenue recognition

6 $ $ $ $ Analyzing Transactions Chapter 5
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Analyzing Transactions Business Transaction 8 $ On October 15 Roadrunner provided delivery service for the Sims Corporation. A check for $1,200 was received in full payment. $ ANALYSIS Identify 1. The accounts Cash in Bank and Delivery Revenue are affected. Classify 2. Cash in Bank is an asset account. Delivery Revenue is a revenue account. + / – 3. Cash in Bank is increased by $1,200. Delivery Revenue is increased by $1,200. $

7 Business Transaction 8 (con’t.)
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Analyzing Transactions (con’t.) $ Business Transaction 8 (con’t.) On October 15 Roadrunner provided delivery service for the Sims Corporation. A check for $1,200 was received in full payment. $ DEBIT-CREDIT RULE 4. Increases in asset accounts are recorded as debits. Debit Cash in Bank for $1,200. 5. Increases in revenue accounts are recorded as credits. Credit Delivery Revenue for $1,200. $

8 Business Transaction 8 (con’t.)
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Analyzing Transactions (con’t.) $ Business Transaction 8 (con’t.) On October 15 Roadrunner provided delivery service for the Sims Corporation. A check for $1,200 was received in full payment. $ Delivery Cash in Bank Revenue T ACCOUNTS 6. $ Debit + 1,200 Credit – Debit – Credit + 1,200

9 $ $ $ $ Analyzing Transactions (con’t.) Chapter 5
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Analyzing Transactions (con’t.) Business Transaction 9 $ On October 16 Roadrunner mailed Check 103 for $700 to pay the month’s rent. $ ANALYSIS Identify 1. The accounts Rent Expense and Cash in Bank are affected. Classify 2. Rent Expense is an expense account. Cash in Bank is an asset account. + / – 3. Rent Expense is increased by $700. Check in Bank is decreased by $700. $

10 Business Transaction 9 (con’t.)
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Analyzing Transactions (con’t.) $ Business Transaction 9 (con’t.) On October 16 Roadrunner mailed Check 103 for $700 to pay the month’s rent. $ DEBIT-CREDIT RULE 4. Increases in expense accounts are recorded as debits. Debit Rent Expense for $700. 5. Decreases in asset accounts are recorded as credits. Credit Cash in Bank for $700. $

11 Business Transaction 9 (con’t.)
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Analyzing Transactions (con’t.) $ Business Transaction 9 (con’t.) On October 16 Roadrunner mailed Check 103 for $700 to pay the month’s rent. $ Rent Expense Cash in Bank T ACCOUNTS 6. $ Debit + 700 Credit – Debit + Credit – 700

12 $ $ $ $ Analyzing Transactions (con’t.) Chapter 5
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Analyzing Transactions (con’t.) Business Transaction 10 On October 18, Beacon Advertising prepared an advertisement for Roadrunner. Roadrunner will pay Beacon’s $75 fee later. $ ANALYSIS Identify 1. The accounts Advertising Expense and Accounts Payable —Beacon Advertising are affected. Classify 2. Advertising Expense is an expense account. Accounts Payable—Beacon Advertising is a liability account. + / – 3. Advertising Expense is increased by $75. Accounts Payable— Beacon Advertising is increased by $75. $ $

13 Business Transaction 10 (con’t.)
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Analyzing Transactions (con’t.) Business Transaction 10 (con’t.) $ On October 18 Beacon Advertising prepared an advertisement for Roadrunner. Roadrunner will pay Beacon’s $75 fee later. $ DEBIT-CREDIT RULE 4. Increases in expense accounts are recorded as debits. Debit Advertising Expense for $75. 5. Increases in liability accounts are recorded as credits. Credit Accounts Payable—Beacon Advertising for $75. $

14 Business Transaction 10 (con’t.)
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Analyzing Transactions (con’t.) $ Business Transaction 10 (con’t.) On October 18 Beacon Advertising prepared an advertisement for Roadrunner. Roadrunner will pay Beacon’s $75 fee later. $ Advertising Accounts Payable— Expense Beacon Advertising T ACCOUNTS 6. $ Debit + 75 Credit – Debit – Credit + 75

15 $ $ $ $ Testing for the Equality of Debits and Credits
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Testing for the Equality of Debits and Credits $ Step 1 Make a list of the account titles used by the business. Step 2 To the right of each account title, list the balance of the account. Use two columns, one for debit balances and the other for credit balances. Step 3 Add the amounts in each column. $ $

16 Following the GAAP principle of
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Following the GAAP principle of revenue recognition, revenue should be recognized on the date earned, even if cash has not been received. $ $ $

17 $ $ $ $ Testing for the Equality of Debits and Credits (con’t.)
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Testing for the Equality of Debits and Credits (con’t.) DEBIT CREDIT ACCOUNT NAME BALANCES BALANCES $ 101 Cash in Bank $ 21,125 105 Accounts Receivable--City News 1,450 110 Accounts Receivable--Green Company 115 Computer Equipment 3,000 120 Office Equipment 200 125 Delivery Equipment 12,000 201 Accounts Payable--Beacon Advertising $ 205 Accounts Payable--North Shore Auto 11,650 301 Maria Sanchez, Capital 25,400 302 Maria Sanchez, Withdrawals 500 303 Income Summary 401 Delivery Revenue 2,650 501 Advertising Expense 75 505 Maintenance Expense 600 510 Rent Expense 700 515 Utilities Expense 125 $ 39,775 $ 39,775 $ $

18 Permanent Account, Owners Capital
DR - CR + Expense Accounts Revenue Accounts Dedit + (1) Increase Side (3) Normal Balance Credit – (2) Decrease Side Debit – (2) Decrease Side Credit + (1) Increase Side (3) Normal Balance Withdrawal Accounts Dedit + (1) Increase Side (3) Normal Balance Credit – (2) Decrease Side

19 Demonstration Problems 5-2 & 5-3

20 + - - + Cash in Bank Ticket Revenue Cash in Bank Asset Ticket Revenue
Increased Ticket Revenue Increased Cash in Bank $4,500 Ticket Revenue $4,500 Cash in Bank Ticket Revenue + - - + $4,500 $4,500

21 + - + - Cash in Bank Travel Expense Cash in Bank Asset Travel Expense
Decreased Travel Expense Increased Travel Expense $300 Cash in Bank $300 Cash in Bank Travel Expense + - + - $300 $300

22 Assignment

23 $ $ p109 Thinking Critically 1-3 Analyzing Accounting Problem 5-2 $ $
Section 2 Applying the Rules of Debit and Credit to Revenue, Expense, and Owner’s Equity Transactions (con’t.) Chapter 5 $ Check Your Understanding $ p109 Thinking Critically 1-3 Analyzing Accounting Problem 5-2 $ $

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