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Chapter 4 The Simple Ledger

Learn how to accurately analyze and record business transactions using the double-entry system. Practice with Transaction Analysis Sheets and real-life examples. Classwork and homework assignments included.

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Chapter 4 The Simple Ledger

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  1. Chapter 4 The Simple Ledger Quiz for this chapter will be on Friday October 3

  2. The Rule of Debit and Credit • Increases are shown on the same side as normal beginning balance of the account appears in the equation • Decreases are shown on the opposite side A = L + OE

  3. Double Entry System of Accounting • Every transaction in business is recorded both as a debit in one (or more) accounts and as a credit in one (or more) accounts. • Under this system, the total of the debit entriesequals the total of the credit entries

  4. Transaction Analysis Sheet TAS will help you to analyze a transaction accurately. • Step 1: Write down (in column A) the names of accounts which are affected by the transaction. • Step 2: Write down (in column B) whether each of these accounts is an asset, a liability, or the owners equity account. • Step 3: Write down (in column C) whether the accounts are to be increased or decreased.

  5. Transaction Analysis Sheet TAS will help you to analyze a transaction accurately. • Step 4: Write down (in column D) whether the accounts are to be debited or credited. • Step 5 : Write the amounts (in column E) by which the accounts are increased or decreased.

  6. Transaction Analysis Sheet • After step 5, you can now make an accounting entry. • Accounting Entry is when you record all the changes in the accounts which is caused by a business transaction. • Let’s do transaction #2 to #7 (Page 96 to 100) on the worksheet, I provided.

  7. Transactions in Page 94 – 100 • Transaction 1: The company purchases $200 worth of supplies from Packaham Products to be paid later. • Transaction 2: The company paid $500 to Dini Bro in partial payment of the amount owed to them. • Transaction 3: The company receives $200 cash from R Van Loon in partical payment of her debt. • Transaction 4: A delievery service is provided for a customer at a price of $400 The customer pays cash at the time of the service is completed.

  8. Transactions in Page 94 - 100 • Transaction 5 • A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the purchase and the balance is to be paid at a later date. • Transaction 6: • A delievery service is completed for R. Van at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. • Transaction 7: • One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired.

  9. Classwork / Homework • Page 102 Review #1, 3, 4, 5, 6, 7, 12 • Page 102-105 Exercises #1 and #2

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