Step 2 Decide if each account increases or decreases using the rules of debits

# Step 2 decide if each account increases or decreases

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Step 2: Decide if each account increases or decreases using the rules of debits and credits. Step 3: Record the transaction in the journal. Step 4: Post the transaction into the ledger. Step 5: Determine if the accounting equation is in balance. In this problem we will focus on the fourth step. A shortened form of the ledger is called the T-account because it takes the form of the capital letter T . The vertical line divides the account into its left and right sides, with the account name at the top. The left side of the T-account is the debit side, and the right side is the credit side. Debits in the journal are posted as debits in the ledger and credits as credits – no exceptions. For this problem, we need to calculate the balance in the Accounts Payable account. Total the debits and the credits for the T-account, and if the debits are greater than the credits, subtract the credits from the debits and enter the balance on the debit (left) side of the account. If the credit is greater than the debits, subtract the debits from the credits and enter the balance on the credit (right) side of the account. Left Side: 6,000 + 12,500 = 18,500 Right Side: 22,000 + 800 + 4,500 + 550 = 27,850 Total: 27,850 – 18,500 = 9350 Bal. 9. The following transactions occurred forGraham Technology Solutions: Read the requirement. (Record debits first, thencredits. Select the explanation on the last line of thejournal entry table.) parts are related Assets appear on the left side of the equation, and the liabilities and equity appear on the right side. Assets = Liabilities + Equity Transactions are first recorded in a journal, which is the record of transactions in date order. Journalizing a transaction records the data only in the journal – but not in the ledger (the record which holds all of the accounts of a business). The data must also be transferred to the ledger. The process of transferring data from the journal to the ledger is called posting . We post from the journal to the ledger. Debits in the journal are posted as debits in the ledger and credits as credits – no exceptions. The journalizing and posting process has five steps: Step 1: Identify the accounts and the account type (asset, liability, or equity). Step 2: Decide if each account increases or decreases using the rules of debits and credits. Step 3: Record the transaction in the journal. Step 4: Post the transaction into the ledger. Step 5: Determine if the accounting equation is in balance. In this problem we will focus on the first three steps. We will analyze and then record Graham Technology Solutions transactions in the journal (journalize the transactions).  #### You've reached the end of your free preview.

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• Fall '10
• MANAGE
• Balance Sheet, Generally Accepted Accounting Principles, office supplies
• • • 