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journal entries
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GOOD MORNING!!
Reminder: A business transaction is anytime that an exchange of value happens within the normal operation of a businessEvery transaction must be recordedEvery transaction affects at least two accountsUp to now:We have been using T-AccountsDebits = Credits
The owner invests $20 000 into the businessCashT. Rantula, Capital20 00020 000
The concepts of T-Accounts remainDebits = CreditsAt least two accounts are affectedBut rather than entering transactions into the T-Accounts immediately, we use the General Journal
Your personal diary
The textbook says:The journal records all parts of a transaction in one place. The date, the debit, the credit and an explanation for each transaction are recorded together.
Can record manually or electronically
Think of the stereotypical girl that enters her thoughts into a journal every night before bed
The accountant loves to get his/her thoughts and feelings (transactions) into his/her journal as soon as something happens within the business.
ADVANTAGESThe complete transaction is recorded in one placeReduces ErrorsEasier to make a mistake in T-Accounts (Debit but no credit, only one account, etc)Transactions are listed in chronological orderShows a picture of every day at the business
This unit is all about the different steps of the accounting cycleThe accounting cycle is the process an accountant goes though during a fiscal periodsBegins with a business transactionEnds with the preparation of the Financial Statements & Closing Entries
Chart1
Sheet1
Sales
1st Qtr8.2
2nd Qtr3.2
3rd Qtr1.4
4th Qtr1.2
To resize chart data range, drag lower right corner of range.
DateParticularsPrDRCR
Summarize each transaction with words and as short as possibleExample: Owner invested cashExample: Made cash sale of ticketsExample: Bought equipment on accountTHIS IS A MUST FOR EACH AND EVERY TRANSACTION!
An increase in amount:
DebitCreditAssets
Drawings
ExpensesLiabilities
Owners Equity
Revenue
A decrease in amount:
DebitCreditLiabilities
Owners Capital
RevenueAssets
Drawings
Expenses
AccountDEBITCREDITAssets
Liabilities
Owners Equity
Drawings
Revenues
Expenses
On October 1st the owner, T. Rantula invests $20 000 into the business
On October 4th the business sold $16 000 worth of tickets
DateParticularsPrDRCROct1Cash2000000 T. Rantula, Capital2000000Invested additional cash
4Cash1600000Ticket Sales1600000Ticket sales for the week
BEGIN ON PAGE 112 in your textQuestion #1-3We will take up #1 in 15 minutes