System to Analyze Transactions 1. Determine whether an asset, a liability, owner’s equity, revenue, or expense account is affected by the transaction. 2. For each account affected by the transaction, determine whether the account increases or decreases. 3. Determine whether each increase or decrease should be recorded as a debit or a credit.

Journalizing and Posting

Dec. 1 NetSolutions paid a premium of $2,400 for a comprehensive insurance policy covering two years. JOURNAL Date Description Debit Credit Page 2 Post. Ref. Dec. 31 2005 1 2 3 4 Prepaid Insurance 2 400 00 Cash 2 400 00 Paid premium on two-year policy.

JOURNAL Page 2 Dec. 1 1 2 3 4 Prepaid Insurance 2 400 00 Cash 2 400 00 Date Description Debit Credit Page 2 Post. Ref. Dec. 1 2005 1 2 3 4 Prepaid Insurance 2 400 00 Cash 2 400 00 Paid premium on two-year policy. ACCOUNT Prepaid Insurance ACCOUNT NO. 15 Balance Post. Ref. Date Item Debit Credit Debit Credit Dec. 1 2005 2 400 00 2 400 00

JOURNAL Page 2 Dec. 1 1 2 3 4 Prepaid Insurance 2 400 00 15 Date Description Debit Credit Page 2 Post. Ref. Dec. 1 2005 1 2 3 4 Prepaid Insurance 2 400 00 15 Cash 2 400 00 Paid premium on two-year policy. ACCOUNT Prepaid Insurance ACCOUNT NO. 15 Balance Post. Ref. Date Item Debit Credit Debit Credit Dec. 1 2005 2 2 400 00 2 400 00

JOURNAL Page 2 1 2 3 4 Dec. 1 Prepaid Insurance 2 400 00 Cash 2 400 00 Post. Ref. JOURNAL Date Description Debit Credit Page 2 1 2 3 4 Dec. 1 2005 Prepaid Insurance 2 400 00 Cash 2 400 00 Paid premium on two-year policy. 15 ACCOUNT Cash ACCOUNT NO. 11 Balance Post. Ref. Date Item Debit Credit Debit Credit Nov. 30 2005 2 2 000 00 5 900 00 Dec. 1 2 400 00 3 500 00

JOURNAL Page 2 1 2 3 4 Dec. 1 Prepaid Insurance 2 400 00 Cash 2 400 00 Post. Ref. JOURNAL Date Description Debit Credit Page 2 1 2 3 4 Dec. 1 2005 Prepaid Insurance 2 400 00 Cash 2 400 00 Paid premium on two-year policy. 15 11 ACCOUNT Cash ACCOUNT NO. 11 Balance Post. Ref. Date Item Debit Credit Debit Credit Nov. 30 2005 2 2 000 00 5 900 00 Dec. 1 2 2 400 00 3 500 00

Dec. 1 NetSolutions paid rent for December, $800. 14 15 16 17 Rent Expense 52 800 00 Cash 11 800 00 Paid rent for December.

Dec. 1 NetSolutions receives $360 for three month’s rent beginning December 1. 14 15 16 17 Cash 14 360 00 Unearned Rent 23 360 00 Received advanced payment For three months’ rent of land.

Dec. 4 NetSolutions purchased office equipment on account from Executive Supply Co. for $1,800. 18 19 20 21 Office Equipment 18 1 800 00 Accounts Payable 21 1 800 00 Purchased office equipment on account.

Dec. 6 NetSolutions paid $180 for a newspaper advertisement. 21 22 23 24 Miscellaneous Expense 59 180 00 Cash 11 180 00 Paid for newspaper ad.

Dec. 11 NetSolutions paid creditors $400. 24 25 26 27 Accounts Payable 21 400 00 Cash 11 400 00 Paid creditors on account.

Dec. 13 NetSolutions paid a receptionist and part-time assistant $950 for two weeks’ wages. JOURNAL Date Description Debit Credit Page 3 Post. Ref. Dec. 13 2005 1 2 3 4 Wages Expense 51 950 00 Cash 11 950 00 Paid two week’s wages.

Dec. 16 NetSolutions received $3,100 from fees earned for the first half of December. 5 6 7 8 Cash 11 3 100 00 Fees Earned 41 3 100 00 Received fees from customers.

Dec. 16 Fees earned on account totaled $1,750 for the first half of December. 9 10 11 12 Accounts Receivable 12 1 750 00 Fees Earned 41 1 750 00 Received fees from customers.

Dec. 20. NetSolutions paid $900 to Executive Supply Co Dec. 20 NetSolutions paid $900 to Executive Supply Co. on the $1,800 debt owed from the December 4 transaction. 20 13 14 15 16 Accounts Payable 21 900 00 Cash 11 900 00 Paid part of amount owed to Executive Supply Co.

Dec. 21 NetSolutions received $650 from customers in payment of their accounts. 18 19 20 21 Cash 11 650 00 Accounts Receivable 12 650 00 Received cash from customer on account.

Dec. 23 NetSolutions paid $1,450 for supplies. 22 23 24 25 Supplies 14 1 450 00 Cash 11 1 450 00 Purchased supplies.

Dec. 27 NetSolutions paid the receptionist and part-time assistant $1,200 for two weeks’ wages. 28 29 30 Wages Expense 51 1 200 00 Cash 11 1 200 00 Paid two weeks’ wages.

Dec. 31 NetSolutions paid its $310 telephone bill for the month. 32 33 34 Utilities Expense 54 310 00 Cash 11 310 00 Paid telephone bill.