Review for AC202

Review for AC202

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Unformatted text preview: Credit—Accounts Payable 46 ANALYZE THE TRANSACTION June 3 Pays $500 to landlord for June rent Debit—Rent expense Credit—Cash 47 ANALYZE THE TRANSACTION June 12 bills J. Kronsnoble $700 for welding work done Debit—Accounts Receivable Credit—Service Revenue 48 Basic Steps in the Recording Process. 1.Analyze 2.Journalize 3.Post 49 The Journal... is an accounting record where the transactions are recorded in chronological order. 50 Recording Process Step 2 Enter transaction information in a journal, a process called journalizing 51 GENERAL JOURNALS GENERAL JOURNALs are two column sheets where every transaction is GENERAL JOURNAL recorded Date Account Titles and Explanation It includes: Jan. 31 Insurance Expense The date Cash The accounts affected Insurance expense for January. (one or more debited, one or more credited in equal amounts) The amounts An explanation P R Debit Credit 200 200 52 Journal Entry EVERY time we debit an account we must credit an account (or GENERAL JOURNAL accounts) for an EQUAL amount Date Account Titles and Explanation (this is called Jan. 31 Insurance Expense Journalizing) Cash Insurance expense for January. P R Debit Credit 200 200 53 The Journal In an actual accounting system, transactions In an actual accounting system, transactions are iinitially recorded in the jjournal.. are nitially recorded in the ournal GENERAL JOURNAL Date Account Titles and Explanation P R Debit Credit 2001 May 1 Cash Capital Stock Owners invest cash in the business. 8,000 8,000 54 JOURNALIZE THE TRANSACTION June 1 Issues common stock to investors in exchange for $2,500 cash Debit—Cash Credit—Common stock 55 JOURNALIZE THE TRANSACTION June 2 Buys equipment on account for $900 Debit—Equipment Credit—Accounts Payable 56 JOURNALIZE THE TRANSACTION June 3 Pays $500 to landlord for June rent Debit—Rent expense Credit—Cash 57 JOURNALIZE THE TRANSACTION June 12 bills J. Kronsnoble $700 for welding work done Debit—Accounts Receivable Credit—Service Revenue 58 JOURNALIZE TRANSACTIONS GENERAL JOURNAL Date Account Titles and Explanation Jun 1 Cash Common Stock P R Debit Credit 2,500 2,500 Issued stock to investors 59 JOURNALIZE TRANSACTIONS GENERAL JOURNAL Date Account Titles and Explanation Jun 2 Equipment Accounts Payable P R Debit Credit 900 900 Bought equipment on account 60 JOURNALIZE TRANSACTIONS GENERAL JOURNAL Date Account Titles and Explanation Jun 3 Rent Expense Cash P R Debit Credit 500 500 Paid June Rent 61 JOURNALIZE TRANSACTIONS GENERAL JOURNAL Date Account Titles and Explanation Jun 12 Accounts Receivable Service Revenue P R Debit Credit 700 700 Billed J. Kronsnoble for welding 62 IMPORTANT A debit and a credit may INCREASE both accounts A debit and a credit may DECREASE both accounts A debit and a credit may increase one account and decrease another When would it do that? 63 Journals Journals aid the recording process by: Disclosing in one place the complete effect of a transaction; Providing a chronological record of transactions; Helping prevent or locate errors because debit and credit amounts can be easily compared. 64 GENERAL JOURNAL Date Account Titles and Explanations Debit Credit 2004 Oct. 1 Cash 10,000...
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This note was uploaded on 09/29/2013 for the course AC 202 taught by Professor Nancyeverett during the Fall '09 term at Park.

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