Horngren Acct7 Ch02 Stu

7/23/2019 Horngren Acct7 Ch02 Stu

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Copyright 2007 Prentice-Hall. All rights reserved

1

Recording BusinessRecording Business

ransactionsransactions

Chapter 2


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2

!"#ective 1!"#ective 1

$se accounting ter%s


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AccountAccount

& Basic su%%ary device

& 'etailed record o( increases and

decreases in speci(ic assets) lia"ilities) oro*ner+s e,uity during a period


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edgeredger

& Boo or printout holding all the accounts


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ia"ilities

ia"ilities /,uity

/,uityAssets

Assets

Accounting /,uationAccounting /,uation

Accounts are grouped in "road categories3


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AssetsAssets

/cono%ic resources that *ill "ene(it the "usinessin the (uture

& Cash

& Accounts Receiva"le& 4otes Receiva"le

& Prepaid /5penses

&and& Building

& /,uip%ent) 6urniture) 6i5tures


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ia"ilitiesia"ilities

Creditors+ clai%s to assets de"t8

& Accounts Paya"le

& 4otes Paya"le& Accrued ia"ilities



!*ner+s /,uity!*ner+s /,uity

!*ner+s clai% to the assets

& Capital

& 9ithdra*als& Revenues

& /5penses



Revenues

NotesPayable

AccountsReceivable

C. Lapp,Capital

AccountsPayable

Ledger

Cash

All :ndividual Accounts Co%"inedAll :ndividual Accounts Co%"ined

;ae $p the edger;ae $p the edger



Chart o( AccountsChart o( Accounts

& ist o( all accounts used "y a co%pany

along *ith the account nu%"ers



12

!"#ective 2!"#ective 2

Apply the rules o( de"it and credit



'ou"le /ntry



Account Name

(Left Side)

Debit

(Right Side)

Credit

ing and deter%ining the"alance in a given account

-Account-Account



Debit CreditDebit Credit

AssetsAssets

++ --

Rules o( 'e"it and CreditRules o( 'e"it and Credit

LiabilitiesLiabilities EquityEquity== ++Debit CreditDebit Credit

- +- +


- +- +




Owners EquityOwners EquityDebit CreditDebit Credit - +- +

ReenuesReenues

- +- +Debit CreditDebit Credit

OwnersOwners

Ca!italCa!italDebit CreditDebit Credit

- +- +

OwnersOwners

"ithdrawals"ithdrawals


++ --

E#!ensesE#!ensesDebit CreditDebit Credit

++ --



ReenuesReenues E#!ensesE#!enses

OwnersOwners

Ca!italCa!ital

OwnersOwners

"ithdrawals"ithdrawals$$

++$$

/5panding the/5panding the


Owners Equity




++ --Debit CreditDebit Credit

++ --



Re%e%"er3 ?ust as A:C/@Re%e%"er3 ?ust as A:C/@

'e"it Credit

A Assets -

- ia"ilities - : :nco%e

- C Capital

/ /5penses -

Really) this is revenues) "ut r #ust doesn+t (it in@

he (irst and the

last are increased

*ith a de"it

he %iddle three

are increased *ith

credits



LiabilitiesLiabilities EquityEquityAssetsAssets %% ++

4or%al Balances4or%al Balances


+ -+ -Debit CreditDebit Credit


- +- +

&'ral&'ral

alan*ealan*e&'ral&'ral


alan*ealan*e



++

Owners Equity

4or%al Balances4or%al Balances


+ -+ -DebitDebit

CreditCredit- +- +Debit CreditDebit Credit

- +- +

&'ral&'ral



alan*ealan*e

ReenuesReenues E#!ensesE#!ensesOwnersOwners

Ca!italCa!italOwnersOwners

"ithdrawals"ithdrawals$$ $$


+ -+ -

&'ral&'ral

alan*ealan*e



21

!"#ective !"#ective

Record transactions in the #ournal



?ournal?ournal

& Chronological record o( the transactions

& Consists o( at least one de"it and one

credit



?ournali>ing ransactions?ournali>ing ransactions

& :denti(y each account a((ected and its type

& 'eter%ine *hether each account is

increased or decreased. $se the rules o(

de"it and credit

& Record transaction in #ournal) including a

"rie( e5planation

= 'e"it side o( entry is entered (irst

= otal de"its should al*ays e,ual total credits



Deneral ?ournalDeneral ?ournal

?ournal Page 1

'ate 'escription 'e"it Credit?ul 1 Cash EF)000

ange) Capital EF)000

:nvest%ent (ro% o*ner

Accounts A((ectedAccounts A((ected

'ollar a%ount o(

de"its and credits

'ollar a%ount o(

de"its and credits

/5planation o(

transaction

/5planation o(

transaction

ransaction'ate

ransaction

'ate


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& 'e"its are A9AG< entered (irst in an

entry. $se the /AC account title and

do not a""reviate

& Credits are :4'/4/' and listed second

& 'o not use dollar signs

&


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/5ercise 2-F/5ercise 2-F

Analysis o( ?une 1 transaction3

& Cash is increasing

& Cash is an asset account& :ncrease an asset *ith a de"it

D/4/RA ?!$R4A

DAE DESCR,,O& RE. DE, CRED,

?un 1 Cash 2F)000


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& ;. Bro*n) Capital is increasing

& Capital is an o*ner+s e,uity account& :ncrease o*ner+s e,uity *ith a credit

D/4/RA ?!$R4A


?un 1 Cash 2F)000

;. Bro*n) Capital 2F)000

Owner invested in business


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& ;edical


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& Accounts Paya"le is increasing

& Accounts Paya"le is a lia"ility account& :ncrease a lia"ility *ith a credit

D/4/RA ?!$R4A


?un 2 ;edical


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& Rent /5pense is increasing

& Rent /5pense is an e5pense account& :ncrease an e5pense *ith a de"it

D/4/RA ?!$R4A


?un 2 Rent /5pense E)000


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& Cash is decreasing

& Cash is an asset account& 'ecrease an asset *ith a credit

D/4/RA ?!$R4A


?un 2 Rent /5pense E)000

Cash E)000

Paid rent for the month


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Analysis o( ?une transaction3

& Accounts Receiva"le is increasing

& Accounts Receiva"le is an asset account& :ncrease an asset *ith a de"it

D/4/RA ?!$R4A


?un Accounts Receiva"le 12)000


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Analysis o( ?une transaction3

&


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F

!"#ective E!"#ective E

Post (ro% the #ournal to the ledger


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PostingPosting

& Periodically) #ournal entries are posted to

ledger accounts to deter%ine "alances in

each account

& Posting = copying a%ounts (ro% the

#ournal to the ledger


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/5ercise 2-J/5ercise 2-J

Cash Accounts Paya"le


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Cash

2F)000

Accounts Paya"le


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Cash

2F)000

Accounts Paya"le


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Cash

2F)000

Accounts Paya"le


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Cash

2F)000

Accounts Paya"le


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6lo* o( Accounting 'ata6lo* o( Accounting 'ata

ransa*ti'n O**urs

S'ur*e D'*uents re!ared

ransa*ti'n Analy5ed

ransa*ti'n 6'urnali5ed 7 'sted


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E

!"#ective F!"#ective F

Prepare and use a trial "alance


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rial Balancerial Balance

& ist o( all accounts *ith their "alances


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;ie Bro*n) ;.'.

rial Balance

?une 0) 200K

Cash 21)000

Accounts Receiva"le 12)000

;edical


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ocating rial Balance /rrorsocating rial Balance /rrors

9hat i( it doesn+t "alanceL

& :s the addition correctL

& Are all accounts listedL& Are the "alances listed correctlyL


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ocating rial Balance /rrorsocating rial Balance /rrors

& 'ivide the di((erence "y t*o

= :s there a de"itMcredit "alance (or this a%ount

posted in the *rong colu%nL

& 'ivide the di((erence "y J. :( evenly

divisi"le) the error %ay "e a slide or

transposition error


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D/4/RA ?!$R4A


/5ercise 2-1K/5ercise 2-1K

Aug 1 Cash N0)000

R. 9ood*ard) Capital N0)000To record investment by owner

2


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D/4/RA ?!$R4A



Aug E Building F0)000

Cash F0)000Purchased building

N Cash )000


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D/4/RA ?!$R4A



Aug J Accounts Paya"le 100

Cash 100Paid on account

17 Accounts Receiva"le 2)100


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D/4/RA ?!$R4A



Aug 2 Cash 1)200

Accounts Receiva"le 1)200Received payment on account

'th 'f these a**'unts

are assets8 Cash is

in*reasing 9 debit8

A**'unts Re*eiable is

de*reasing - *redit


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D/4/RA ?!$R4A



Aug 1


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/5ercise 2-1J/5ercise 2-1JAug 9 100

Cash

Aug 1 60,000 Aug 4 50,000Aug 6 3,000

A**'unts Re*eiable

Aug 17 2,100Seri*e Reenue

Aug 6 3,000

al8 0/1322

uilding

Aug 4 50, 000

R8 "''dward1 Ca!ital

Aug 1 60,000

Rent E#!ense

Salary E#!ense

Aug 2 200

Su!!lies

Aug 2 200

A**'unts ayable

Aug 9 100

al8 022

Aug 17 2,100

Aug 23 1,200

Aug 23 1,200

Aug 31 1,200Aug 31 500

al8 :22al8 41022

Aug 31 1,200

Aug 31 500

a;e the differen*e

between t'tal debits

and t'tal *redits t'

deterine the balan*e

in ea*h a**'unt8 ,f

debits are greater than

*redits1 the a**'unt

has a debit balan*eand i*e ersa

/ i 2 1J/ i 2 1J


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9ood*ard echnology


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/nd o( Chapter 2/nd o( Chapter 2

Horngren Acct7 Ch02 Stu

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