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Chapter 3 Analyzing Transactions into Debit and Credit Parts. T- Account. Assets = Liabilities + Owners Equity. Each account receives a T-Account so that we may analyze the balance of the account. Analyzing the T-Account. Left Side. Right Side. Debit. Credit.

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slide2

T- Account

Assets = Liabilities + Owners Equity

Each account receives a T-Account so that we may analyze

the balance of the account

analyzing the t account
Analyzing the T-Account

Left Side

Right Side

Debit

Credit

Each account will have its own T-account

Cash,Supplies,Pre-paid Insurance

slide4

Assets = Liabilities + Owners Equity

Left Side

Right Side

Left Side

Debit Credit

Right Side

Debit Credit

Normal Bal...

Normal Bal...

+ -

- +

Cash

Supplies

Prepaid Insurance

slide6
Assets

Cash

Supplies

Prepaid Insurance

Accounts Receivable

Liabilities

Accounts Payable

Owners Equity

Barbara Trevino, Capital

All companies have a sheet of paper that tell you what all of their accounts are it is called – Chart of Accounts
4 questions you need to ask
4 questions you need to ask….

What two accounts does it effect?

What types of accounts are they?

How is each account balanced changed?

How is each amount entered into the T- Accounts?

slide8

1. Received cash from owner as an investment $10,000

What two accounts does it effect?

Cash

Barbara Trevino, Capital

What types of accounts are they?

Asset

Owners Equity

How is each account balanced changed?

Cash

Increased

Barbara Trevino, Capital

increase

How is each amount entered into the T- Accounts

4 questions you need to ask9
4 questions you need to ask….

What two accounts does it effect?

What types of accounts are they?

How is each account balanced changed?

How is each amount entered into the T- Accounts?

how is each amount entered into the t accounts
How is each amount entered into the T- Accounts

Received Cash from Owner

10,000

Cash

Barbara Trevino, Capital

Debit Credit

Debit Credit

Normal Bal...

Normal Bal...

+ -

- +

10,000

10,000

So we say for this transaction we Debit Cash, Credit Capital

two major rules we must remember
Two major rules we must remember……...
  • Accounting Equation - Do our assets = our liabilities + our owners Equity????
  • Do our debits = our credits???
slide12

1. Paid cash for supplies $1,577

What two accounts does it effect?

Cash

Supplies

What types of accounts are they?

Asset

How is each account balanced changed?

Cash

Decreases

Supplies

increase

How is each amount entered into the T- Accounts

how is each amount entered into the t accounts13
How is each amount entered into the T- Accounts

Paid Cash for supplies 1,577

Cash

Supplies

Debit Credit

Debit Credit

Normal Bal...

Normal Bal....

+ -

+ -

1,577

1,577

So we say for this transaction we Credit cash, Debit Supplies

slide14

1. Paid cash for Insurance

What two accounts does it effect?

Cash

Prepaid Insurance

What types of accounts are they?

Asset

How is each account balanced changed?

Prepaid Insurance

Cash

Decreases

increase

How is each amount entered into the T- Accounts

how is each amount entered into the t accounts15
How is each amount entered into the T- Accounts

Paid Cash for Insurance

Cash

Prepaid Insurance

Debit Credit

Debit Credit

Normal Bal..

Normal Bal..

+ -

+ -

1200

1200

So we say for this transaction we Credit cash, Debit PPI

slide16

Bought supplies on account from Butler Cleaning Supplies

2,720

What two accounts does it effect?

Supplies

Butler Cleaning Supplies

What types of accounts are they?

Asset

Liability

How is each account balanced changed?

Butler Cleaning Supplies

Supplies

Increase

increase

How is each amount entered into the T- Accounts

how is each amount entered into the t accounts17
How is each amount entered into the T- Accounts

Bought supplies on account

Supplies

Butler Cleaning Supplies

Debit Credit

Debit Credit

Normal Bal..

Normal Bal..

+ -

- +

2,270

2,270

So we say for this transaction we Debit supplies, Credit Butler

Cleaning Sup

slide18

Paid cash on account to Butler Cleaning Supplies 1,360

What two accounts does it effect?

Cash

Butler Cleaning Supplies

What types of accounts are they?

Asset

Liability

How is each account balanced changed?

Cash

Decreases

Butler Cleaning Supply

decreases

How is each amount entered into the T- Accounts

how is each amount entered into the t accounts19
How is each amount entered into the T- Accounts

Paid Cash on Account

Cash

Butler Cleaning Supply

Debit Credit

Debit Credit

Normal Bal..

Normal Bal..

+ -

- +

1360

1360

So we say for this transaction we Credit cash, Debit Butler

cleaning supplies

slide21

Assets = Liabilities + Owners Equity

Owners Equity

Left Side

Right Side

Left Side

Debit Credit

Right Side

Normal Bal..

Debit Credit

- +

Revenue

Normal Bal..

+ -

Left Side

Right Side

Debit Credit

Cash

Supplies

Prepaid Insurance

Normal Bal..

- +

Expense

Left Side

Right Side

Debit Credit

Normal Bal..

+ -

slide22

Received Cash from Sales $525

What two accounts does it effect?

Cash

Sales

What types of accounts are they?

Asset

Revenue

How is each account balanced changed?

Increase

Cash

Increases

Sales

How is each amount entered into the T- Accounts

how is each amount entered into the t accounts23
How is each amount entered into the T- Accounts

Received Cash from Sales

Cash

Sales

Debit Credit

Debit Credit

Normal Bal..

Normal Bal..

+ -

- +

525

525

So we say for this transaction we Debit Cash, Credit Sales

slide24

Paid Cash for Rent 250

What two accounts does it effect?

Cash

Rent Expense

What types of accounts are they?

Asset

Expense

How is each account balanced changed?

Increase

Cash

Decreases

Rent Expense

How is each amount entered into the T- Accounts

how is each amount entered into the t accounts25
How is each amount entered into the T- Accounts

Paid cash for rent $250

Cash

Rent Expense

Debit Credit

Debit Credit

Normal Bal..

Normal Bal..

+ -

+ -

250

250

So we say for this transaction we Credit Cash, Debit Rent Exp.

slide26

Paid cash to owner for personal use $100

What two accounts does it effect?

Cash

Ben Furman, Drawing

What types of accounts are they?

Asset

Drawing

How is each account balanced changed?

Ben Furman, Drawing

Cash

Decrease

Increase

How is each amount entered into the T- Accounts

how is each amount entered into the t accounts27
How is each amount entered into the T- Accounts

Paid cash to owner for personal

Use $100

Cash

Ben Furman, Drawing

Debit Credit

Debit Credit

Normal Bal

Normal Bal

+ -

+ -

100

100

So we say for this transaction we Credit Cash, Debit Drawing

slide28

Page 58

Prob 3-1,2,3,4,5

slide29

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