Accounting I Unit I Chapters 1-5. THE ACCOUNTING EQUATION.

Accounting I

Unit IChapters 1-5

THE ACCOUNTING EQUATION

How Business Activities Change the Accounting Equation

Transaction 1: August 1. Received cash from owner as an investment, $5,000.00

RECEIVING CASH


PAYING CASH

Transaction 2: August 3. Paid cash for supplies, $275.00

Transaction 3:August 4. Paid cash for insurance, $1,200.00


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

Transaction 6: August 12. Received cash from sales, $295.00

Transaction 7: August 12. Sold services on account to Oakdale School, $350.00

Revenue Transactions


Expense TransactionsTransaction 8: August 12. Paid cash for rent,

$300.00.

Transaction 9: August 12. Paid cash for telephone bill, $40.00.


Other Cash TransactionsTransaction 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.


PAID CASH FOR SUPPLIES

August 3: Paid cash for supplies, $275.00.


PAID CASH FOR INSURANCE

August 4: Paid cash for insurance, $1,200.00.


BOUGHT SUPPLIES ON ACCOUNT

August 7: Bought supplies on account from Supply Depot, $500.00.


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.


SOLD SERVICES ON ACCOUNT

August 12: Sold services on account to Oakdale School, $350.00.


PAID CASH FOR AN EXPENSE

August 12: Paid cash for rent, $300.00.


RECEIVED CASH ON ACCOUNT

August 12: Received cash on account from Oakdale School, $200.00.


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

JournalGeneral Journal


JournalChecks

• Cash Payments• Check stub records the payment and maintains the checkbook balance


JournalInvoice

• Sales Invoice: Selling on account (billing)• Purchase Invoice: Buying on account


Journal

Receipt

• For Receiving Cash or Checks

Calculator Tape• For Cash Sales

Memorandum• Internal Transactions


JournalRECEIVED 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 amount3. 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 4. Paid cash for insurance, $1,200.00. Check No. 2.

August 3. Paid cash for supplies, $275.00. Check No. 1.


August 11. Paid cash on account to Supply Depot, $300.00. Check No. 3.

August 7. Bought supplies on account from Supply Depot, $500.00. Memo No. 1.


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.


August 12: Paid cash for rent, $300.00. Check No. 4.

August 12. Sold services on account to Oakdale School, $350.00. Sales Invoice No. 1.


August 12. Paid cash to owner for personal use, $125.00. Check No. 6.

August 12. Received cash on account from Oakdale School, $200.00. Receipt No. 2.

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.



number.3. Write the credit

amount.





number.3. Write the debit

amount.



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


MEMORANDUM FOR A CORRECTING ENTRY


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 Reconciliation1. Date

2. Check Stub Balance3. Service Charge4. Adjusted Check Stub

Balance5. Bank Statement

Balance6. Outstanding

Deposits7. Subtotal8. Outstanding Checks9. Adjusted Bank

Balance10.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

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.

August 31: Received bank statement showing August bank service charge, $8.00. Memorandum No. 3.

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.


JOURNALIZING A DISHONORED CHECK

1. Write the date. 2. Write the title and amount to be debited.3. Write the title and amount to be credited4. Write the source document number in the Doc. No.

column.

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.


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 CashESTABLISHING A PETTY CASH FUND

August 17. Paid cash to establish a petty cash fund, $100.00. Check No. 8.

1. Write the date. 2. Write the title and amount to be debited.3. Write the title and amount to be credited4. Write the source document number in the Doc. No.

column.

Petty CashREPLENISHING 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 credited4. Write the source document number in the Doc. No.

column.

Accounting I Unit I Chapters 1-5. THE ACCOUNTING EQUATION.

Documents

Transcript of Accounting I Unit I Chapters 1-5. THE ACCOUNTING EQUATION.