ac101_ch2 - Revised July 2008 ACC101 CHAPTER 2 Accounting...

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Revised July 2008 Page 1 of 16 ACC101 – CHAPTER 2 Accounting for Transactions
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Revised July 2008 Page 2 of 16 Key Terms and Concepts to Know Double–entry accounting: Debits and Credits Total debits must always equal total credits Accounting Books: Accounts General Journal General Ledger (T account) Chart of Accounts Business Transactions: Impact on the accounting equation Impact on accounts and financial statements Journalizing (Recording) transactions in the General Journal Posting (Recording) Transactions from the General Journal to the General Ledger Trial Balance: Prepare a Trial Balance Use the trial balance to prepare financial statements Find and correct errors using the trial balance Debt Ratio
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Revised July 2008 Page 3 of 16 DEBIT SIDE CREDIT SIDE A fter L et’s E ating R ead D inner C omics Assets, Expenses and Dividends Normal balance on the DEBIT side Increase on the DEBIT side Decrease on the CREDIT side Liabilities, Revenues, and Capital Normal balance on the CREDIT side Increase on the CREDIT side Decrease on the DEBIT side Example #1: 1) Journalize the transactions below using the following account titles: Cash Accounts Receivable Supplies Accounts Payable Capital Stock Dividends Sales Commissions Office Salaries Expense Rent Expense Automobile Expense Supplies Expense Misc. Expense 2) Prepare T-accounts and post the entries to the appropriate accounts. Determine balances after all entries are posted. a. Issued capital stock for $16,000. b. Paid rent on office building for the month, $3,000. c. Purchased supplies on account, $1,200. d. Paid creditor on account, $800. e. Earned sales commissions and sent invoices to customers, $22,500. f. Paid automobile expenses for month, $2,900, and miscellaneous expenses, $1,450. g. Paid office salaries, $4,200. h. Determined the cost of supplies used was $960. i. Paid cash dividends, $1,400.
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Revised July 2008 Page 4 of 16 Solution #1 a. Cash 16,000 Capital Stock 16,000 b. Rent Expense 3,000 Cash 3,000 c. Supplies 1,200 Accounts Payable 1,200 d. Accounts Payable 800 Cash 800 e. Accounts Receivable 22,500 Sales Commissions 22,500 f. Automobile Expenses 2,900 Misc. Expenses 1,450 Cash 4,350 g. Salaries Expense 4,200 Cash 4,200 h. Supplies Expense 960 Supplies 960 i. Dividends 1,400 Cash 1,400 Cash A/R Supplies a) 16,000 3,000 b) e) 22,500 c) 1,200 960 h) 800 d) 4,350 f) 240 Balance 4,200 g) 1,400 i) 2,250 Balance A/P Capital Stock Dividends d) 800 1,200 c) 16,000 a) i) 1,400 400 Balance Sales Commissions Office Salaries Exp. Rent Exp. 22,500 e) g) 4,200 b) 3,000 Auto Exp. Supplies Exp. Misc. Exp. f) 2,900 h) 960 f) 1,450
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Revised July 2008 Page 5 of 16 Practice Problem #1: Journalize each of the following transactions in a two-column journal and post the entries to T-accounts. Use the chart of accounts below.
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ac101_ch2 - Revised July 2008 ACC101 CHAPTER 2 Accounting...

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