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UNIT #7 - ACCOUNT BALANCES

TUTORIAL - INTIAL

TUTORIAL - COMPLETED

7/29/2019 Inst 7

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INSTRUCTIONS FOR UNIT #7

~ Once transactions have been recorded, they have to be noted or recorded in theirrespective accounts. For example, every transaction has one or more debits and credits toconform to the double entry principle (two sides) and the basic equation (A = L + E). If acompany issues stock for cash, then Cash is debited and Capital Stock is credited.Therefore, the cash account is debited and the capital stock account is credited. Thisprocess is called posting.

~ In a computerized system, that posting is done automatically as entries are made. Thiswill be illustrated in the accompanying tutorial. As you note the tutorial, you will see theentries "posted" to their respective accounts.

~ As these entries are posted the balance is calculated in each account. Accordingly, eachaccount will have a debit, credit, or -0- balance. Remember in Tutorial #5 many accountshave "normal" balances, debit or credit.

~ Using the tutorial titled Initial, the first column on the left is a set of accounts forjournalizing. The accounts and debit and credit columns have been formatted. Thecolumns to the right have been programmed to post these entries to the accounts andrecord the balances. Since L and E accounts have credit balances, they have beenprogrammed to show non bracketed numbers that are highlighted in red. The defaultsettings are set at -0-.

~ For each of the following enter the amounts in correct cells for the journal entrieslisted in the columns on the left. As you do this note carefully how the postings are madeto the respective accounts (debit and credit columns) on the right. Also note the balance

is calculated after each posting. Accounts with credit balances will show non bracketedamounts highlighted in red. After you enter the ten entries, note equality of debits andcredits and the equality of debit and credit account balances. This is the idea of a trialbalance.

~ The ten entries are:Issuing stock for cash = $ 15,000.

Buying equipment for $ 5,000; paying $ 2,000 in cash and $ 3,000 on account.

Buying supplies for $ 1,000; paying $ 500 in cash and $ 500 on account.

Billing a client for services rendered = $ 15,000.

Receiving payment from accounts receivable = $ 5,000.

Recording expense: wages = $ 2,000, salary = $ 1,000, and rent = $ 1,000. For these$ 2,000 was paid immediately and $ 2,000 was set up as accounts payable, to be paidlater.

7/29/2019 Inst 7

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INSTRUCTIONS FOR UNIT #7

Purchased prepaid insurance of $ 600; paid cash.

Recorded expired (used up) insurance of $ 50.

Took an inventory of supplies and determined that $ 400 had been used; recordedthat expense.

Paid $ 2,000 against accounts payable.

~ Again, note how the postings are made and balances calculated as you make the entries.

~ The tutorial Completed shows the correct amounts, postings, balances, equality ofdebit and credit balances.