Sample Journal Entry
Exercises
Week 1-Supplemental Information
Balance Sheet Accounts
Debits
Credits
Asset accounts……. Increase (+) Decrease (-)
Liability accounts.… Decrease (-) Increase (+)
Owner’s equity
(capital) accounts… Decrease (-) Increase (+)
Balance Sheet Accounts
Asset Accounts
Debit for
increases
(+)
Credit for
decreases
(–)
Liability Accounts
Debit for
decreases
(–)
Credit for
increases
(+)
Owner’s Equity Accounts
Debit for
decreases
(–)
Credit for
increases
(+)
Income Statement Accounts
Debits
Revenue accounts… Decrease (-)
Expense accounts… Increase (+)
Credits
Increase (+)
Decrease (-)
Income Statement Accounts
Revenue Accounts
Debit for
Credit for
decreases
increases
(–)
(+)
Less
Expense Accounts
Debit for
increases
(+)
Credit for
decreases
(–)
Equals
Net Income (credit > debits)
increases owners’ equity (capital)
Net Loss (debits > credits) decreases
owners’ equity (capital)
Increase
(Normal Bal.) Decreases
Balance sheet accounts:
Asset
Liability
Owner’s Equity:
Capital
Drawing
Income statement accounts:
Revenue
Expense
Debit
Credit
Credit
Debit
Credit
Debit
Debit
Credit
Credit
Debit
Debit
Credit
Sample Exercise 1
Prepare a journal entry for the purchase of a truck on June 3
for $42,500, paying $8,500 cash and the remainder on
account.
June 3 Truck
Cash
Accounts Payable
42,500
8,500
34,000
Sample Exercise 2
Prepare a journal entry on August 7 for the fees earned on
account, $115,000.
Aug. 7
Accounts Receivable
Fees Earned
115,000
115,000
Drawing Account
The owner of a proprietorship may
withdraw cash from the business for
personal use. Such withdrawals have the
effect of decreasing owner’s equity.
Sample Exercise 3
Prepare a journal entry on December 29 for the payment of
$12,000 to the owner of Smartstaff Consulting Services,
Dominique Walsh, for personal use.
Dec. 29 Dominique Walsh, Drawing
Cash
12,000
12,000
Sample Exercise 4
State for each account whether it is likely to have (a)
debit entries only, (b) credit entries only, or (c) both
debit and credit entries. Also, indicate its normal
balance.
1.
2.
3.
4.
5.
6.
Amber Saunders, Drawing
Accounts Payable
Cash
Fees Earned
Supplies
Utilities Expense
Solution for Sample Exercise 4
1.
2.
3.
4.
5.
6.
Debit entries only; normal debit balance
Debit and credit entries; normal credit balance
Debit and credit entries; normal debit balance
Credit entries only; normal credit balance
Debit and credit entries; normal debit balance
Debit entries only; normal debit balance
Sample Exercise 5
On March 1, the cash account balance was
$22,350. During March, cash receipts
totaled $241,880 and the March 31 balance
was $19,125. Determine the cash payments
made during March.
Solution for Sample Exercise 5
Using the following T-account solve for the amount of
cash payment (indicated by ? below).
Cash
Mar. 1 Bal
22,350 ?
Cash receipts 241,880
Mar. 31 Bal. 19,125
Cash payments
$19,125 = $22,350 + $241,880 – Cash payments
Cash payments = $22,350 + $241,880 –$19,125 =
$245,105
NetSolutions received an offer from a
local retailer to rent the land purchased
on November 5. The retailer plans to use
the land as a parking lot for its employees
and customers. NetSolutions agreed to
rent the land to the retailer for three
months, with the rent payable in advance.
Dec. 1 NetSolutions receives $360 for
three month’s rent for use of its
land beginning December 1.
1 Cash
11
Unearned Rent
Received advance
payment for three
months’ rent on land.
23
360 00
360 00
Dec. 4 NetSolutions purchased office
equipment on account from
Executive Supply Co. for $1,800.
4
Office Equipment
Accounts Payable
Purchased office
equipment on account.
18
21
1 800 00
1 800 00
The equality of debits and credits
for each transaction is built into the
accounting equation: Assets =
Liabilities + Owner’s Equity.
Because of this double equality,
this system is called the doubleentry accounting system.
Reference
Warren, C., Reeve, J., & Duchac, J., (2007). Accounting
(22nd ed.). Mason, Ohio: Thomson South-Western
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