Chapter 4 The Simple Ledger
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Transcript of Chapter 4 The Simple Ledger
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Chapter 4 Chapter 4 The Simple LedgerThe Simple Ledger
Quiz for this chapter will be on Friday Quiz for this chapter will be on Friday October 3 October 3
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The Rule of Debit and Credit
Increases are shown on the same side as normal beginning balance of the account appears in the equationDecreases are shown on the opposite side
A = L + OE AssetsAssets Liabilities Liabilities Owner’s EquityOwner’s Equity
Debit Debit DebitDebit DebitDebit
CreditCredit CreditCredit CreditCredit
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Every transaction in business is recorded both as a debit in one (or more) accounts and as a credit in one (or more) accounts. Under this system, the total of the debit entries equals the total of the credit entries
Double Entry System of Accounting
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TAS will help you to analyze a transaction accurately.
Step 1: Write down (in column A) the names of accounts which are affected by the transaction.
Step 2: Write down (in column B) whether each of these accounts is an asset, a liability, or the owners equity account.
Step 3: Write down (in column C) whether the accounts are to be increased or decreased.
Transaction Analysis Sheet
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TAS will help you to analyze a transaction accurately.
Step 4: Write down (in column D) whether the accounts are to be debited or credited.
Step 5 : Write the amounts (in column E) by which the accounts are increased or decreased.
Transaction Analysis Sheet
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After step 5, you can now make an accounting entry. Accounting Entry is when you record all the changes in the accounts which is caused by a business transaction. Let’s do transaction #2 to #7 (Page 96 to 100) on the worksheet, I provided.
Transaction Analysis Sheet
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Transaction 1: The company purchases $200 worth of supplies from Packaham Products to be paid later.Transaction 2: The company paid $500 to Dini Bro in partial payment of the amount owed to them. Transaction 3: The company receives $200 cash from R Van Loon in partical payment of her debt. Transaction 4: A delievery service is provided for a customer at a price of $400 The customer pays cash at the time of the service is completed.
Transactions in Page 94 – 100
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Transaction 5• A used truck costing $8000 is purchased from Dini
Bros. A cash down payment of $2500 is made at the purchase and the balance is to be paid at a later date.
Transaction 6: A delievery service is completed for R. Van at a price
of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days.
Transaction 7: One of the lifting machines (part of Equipment) breaks
down. The company spends $650 cash to have the machine repaired.
Transactions in Page 94 - 100
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Page 102 Review #1, 3, 4, 5, 6, 7, 12Page 102-105 Exercises #1 and #2
Classwork / Homework