Accounting I
Unit I
Chapters 1-5
THE ACCOUNTING EQUATION
How Business Activities Change
the Accounting Equation
RECEIVING CASH
Transaction 1: August 1. Received cash from owner as
an investment, $5,000.00
How Business Activities Change
the Accounting Equation
PAYING CASH
Transaction 2: August 3. Paid cash for supplies, $275.00
Transaction 3:August 4. Paid cash for insurance, $1,200.00
How Business Activities Change
the Accounting Equation
Transactions on Account
Transaction 4: August 7. Bought supplies on account from
Supply Depot, $500.00
Transaction 5: August 11. Paid cash on account to Supply
Depot, $300.00
How Transactions Change Owner’s
Equity in an Accounting Equation
Revenue Transactions
Transaction 6: August 12. Received cash from sales,
$295.00
Transaction 7: August 12. Sold services on account to
Oakdale School, $350.00
How Transactions Change Owner’s
Equity in an Accounting Equation
Expense Transactions
Transaction 8: August 12. Paid cash for rent, $300.00.
Transaction 9: August 12. Paid cash for telephone bill,
$40.00.
How Transactions Change Owner’s
Equity in an Accounting Equation
Other Cash Transactions
Transaction 10: August 12. Received cash on account
from Oakdale School, $200.00
Transaction 11: August 12. Paid cash to owner for
personal use, $125.00
Using T Accounts
ANALYZING THE ACCOUNTING EQUATION
Using T Accounts
INCREASES AND DECREASES IN ACCOUNTS
Analyzing How Transactions
Affect Accounts
RECEIVED CASH FROM OWNER AS AN INVESTMENT
August 1: Received cash from owner as an investment,
$5,000.00.
Analyzing How Transactions
Affect Accounts
PAID CASH FOR SUPPLIES
August 3: Paid cash for supplies, $275.00.
Analyzing How Transactions
Affect Accounts
PAID CASH FOR INSURANCE
August 4: Paid cash for insurance, $1,200.00.
Analyzing How Transactions
Affect Accounts
BOUGHT SUPPLIES ON ACCOUNT
August 7: Bought supplies on account from Supply
Depot, $500.00.
Analyzing How Transactions
Affect Accounts
PAID CASH ON ACCOUNT
August 11: Paid cash on account to Supply Depot,
$300.00.
Analyzing How Transactions
Affect Owner’s Equity Accounts
RECEIVED CASH FROM SALES
August 12: Received cash from sales, $295.00.
Analyzing How Transactions
Affect Owner’s Equity Accounts
SOLD SERVICES ON ACCOUNT
August 12: Sold services on account to Oakdale School,
$350.00.
Analyzing How Transactions
Affect Owner’s Equity Accounts
PAID CASH FOR AN EXPENSE
August 12: Paid cash for rent, $300.00.
Analyzing How Transactions
Affect Owner’s Equity Accounts
RECEIVED CASH ON ACCOUNT
August 12: Received cash on account from Oakdale
School, $200.00.
Analyzing How Transactions
Affect Owner’s Equity Accounts
PAID CASH TO OWNER FOR PERSONAL USE
August 12. Paid cash to owner for personal use, $125.00.
Journals, Source Documents, and
Recording Entries in a Journal
General Journal
Journals, Source Documents, and
Recording Entries in a Journal
Checks
• Cash Payments
• Check stub records the payment and maintains
the checkbook balance
Journals, Source Documents, and
Recording Entries in a Journal
Invoice
• Sales Invoice: Selling on account (billing)
• Purchase Invoice: Buying on account
Journals, Source Documents, and
Recording Entries in a Journal
Receipt
Calculator Tape
• For Cash Sales
Memorandum
• Internal Transactions
• For Receiving Cash or
Checks
Journals, Source Documents, and
Recording Entries in a Journal
RECEIVED CASH FROM OWNER AS AN INVESTMENT
August 1: Received cash from owner as an investment,
$5,000.00. Receipt No. 1.
1. Write the date in the Date column.
2. Write the title of the account debited.
Write the debit amount
3. Write the title of the account credited.
Write the credit amount.
4. Write the source document number in the
Doc. No. column.
Journals, Source Documents, and
Recording Entries in a Journal
August 3. Paid cash for supplies, $275.00. Check No. 1.
August 4. Paid cash for insurance, $1,200.00. Check No. 2.
Journals, Source Documents, and
Recording Entries in a Journal
August 7. Bought supplies on account from Supply Depot, $500.00.
Memo No. 1.
August 11. Paid cash on account to Supply Depot, $300.00. Check No. 3.
Journals, Source Documents, and
Recording Entries in a Journal
August 12: Received cash from sales, $295.00. Tape No. 12.
1. Write the date in the Date column.
2. Write the title of the account debited. Write
the debit amount.
3. Write the title of the account credited.
Write the credit amount.
4. Write the source document number in the
Doc. No. column.
Journals, Source Documents, and
Recording Entries in a Journal
August 12. Sold services on account to Oakdale School, $350.00. Sales
Invoice No. 1.
August 12: Paid cash for rent, $300.00. Check No. 4.
Journals, Source Documents, and
Recording Entries in a Journal
August 12. Received cash on account from Oakdale School, $200.00.
Receipt No. 2.
August 12. Paid cash to owner for personal use, $125.00. Check No. 6.
Preparing a Chart of Accounts
Preparing a Chart of Accounts
1. Write the account title after the word Account in the
heading.
2. Write the account number after the words Account No. in
the heading
Posting From a Journal to Ledger
1. Write the date.
2. Write the journal page
number.
3. Write the debit amount.
4. Write the new account
balance.
5. Return to the journal
and write the account
number.
Posting From a Journal to Ledger
1. Write the date.
2. Write the journal page
number.
3. Write the credit amount.
4. Write the new account
balance.
5. Return to the journal
and write the account
number.
Posting From a Journal to Ledger
1. Write the date.
2. Write the journal page
number.
3. Write the debit amount.
4. Write the new account
balance.
5. Return to the journal
and write the account
number.
Posting From a Journal to Ledger
1. Write the date.
2. Write the journal page
number.
3. Write the debit amount.
4. Write the new account
balance.
5. Return to the journal
and write the account
number.
Proving Cash, and Making Correcting
Entries
1.
Identify the checkbook balance on the most recent
check stub.
2. Identify the cash account balance within the general
ledger.
3. Match the two balances
Proving Cash, and Making Correcting
Entries
MEMORANDUM FOR A CORRECTING ENTRY
Proving Cash, and Making Correcting
Entries
JOURNAL ENTRY TO RECORD A CORRECTING ENTRY
November 13. Discovered that a payment of cash for
advertising in October was journalized and posted in error
as a debit to Miscellaneous Expense instead of
Advertising Expense, $140.00. Memorandum No. 15.
Checking Accounts
COMPLETED CHECK STUB
1. Write the amount of the
check.
2. Write the date of the check.
3. Write to whom the check is
to be paid.
4. Record the purpose of the
check.
5. Write the amount of the
check.
6. Calculate the new checking
account balance.
Checking Accounts
COMPLETED CHECK
1. Write the date.
2. Write to whom the check
is to be paid.
3. Write the amount in
figures.
4. Write the amount in
words.
5. Write the purpose of the
check.
6. Sign the check.
Bank Reconciliation
Bank Statement
Bank Reconciliation
Bank Statement Reconciliation
1.
2.
3.
4.
Date
Check Stub Balance
Service Charge
Adjusted Check Stub
Balance
5. Bank Statement
Balance
6. Outstanding Deposits
7. Subtotal
8. Outstanding Checks
9. Adjusted Bank Balance
10. Compare Adjusted
Balances
Bank Reconciliation
Bank Statement Reconciliation
1. Write Service Charge
$8.00 on the check
stub under the heading
“Other.” Check Stub
Balance
2. Write the amount of
the service charge in
the amount column.
Adjusted Bank Balance
3. Calculate and record
the new subtotal on
the Subtotal line.
Bank Reconciliation
JOURNALIZING A BANK SERVICE CHARGE
August 31: Received bank statement showing August bank
service charge, $8.00. Memorandum No. 3.
1. Write the date.
2. Write the title of the account debited. Record the debit
amount.
3. Write the title of the account credited. Record the credit
amount.
4. Write the source document number in the Doc. No. column.
Dishonored Checks and Electronic
Banking
RECORDING A DISHONORED CHECK ON A CHECK STUB
1. Write Dishonored
check $105.00 on the
line under the heading
“Other.”
2. Write the total of the
dishonored check in
the amount column.
3. Calculate and record
the new subtotal on the
Subtotal line.
Dishonored Checks and Electronic
Banking
JOURNALIZING A DISHONORED CHECK
November 29. Received notice from the bank of a
dishonored check from Campus Internet Café, $70.00, plus
$35.00 fee; total, $105.00. Memorandum No. 55.
1.
2.
3.
4.
Write the date.
Write the title and amount to be debited.
Write the title and amount to be credited
Write the source document number in the Doc. No. column.
Dishonored Checks and Electronic
Banking
September 2. Paid cash on account to Kelson Enterprises,
$350.00, using EFT. Memorandum No. 10.
September 5. Purchased supplies, $24.00, using debit card.
Memorandum No. 12.
Petty Cash
ESTABLISHING A PETTY CASH FUND
August 17. Paid cash to establish a petty cash fund,
$100.00. Check No. 8.
1.
2.
3.
4.
Write the date.
Write the title and amount to be debited.
Write the title and amount to be credited
Write the source document number in the Doc. No.
column.
Petty Cash
REPLENISHING A PETTY CASH FUND
August 31: Paid cash to replenish the petty cash fund, $30.00:
misc. expense, $20.00; advertising, $10.00. Check No. 12
1. Write the date.
2. Write the title of the first account debited. Write the
debit amount. Write the title of the second account.
Record the debit amount.
3. Write the title and amount to be credited
4. Write the source document number in the Doc. No. column.