Chapter 2

The “T” Account Debit Side Cash Credit Side Debit Balance: Credit Balance:

T Account Example Create and update T Account for a sample Supplies Account: Bought $200 worth of supplies Returned $50 worth of supplies Bought $150 worth of supplies Used $30 worth of supplies

T Account Example Debit Side Supplies Credit Side Balance:

The General Ledger The General Ledger keeps a running tally of the value of an account and is a more formal version of the T Account.

The General Ledger Supplies No. 102 Date Explanation Ref DR CR Balance Sept 1 Sept 3 Sept 10 Sept 15 200 150 50 30 300 270

The Trial Balance A list of accounts and their balances at a given time, usually at the end of the accounting period.

Campus Laundromat Trial Balance September 30, 2010 Account Debit Credit Cash Prepaid Insurance Laundry Equipment Notes Payable Accounts Payable Ng Ye, Capital Ng Ye, Drawings Service Revenue Advertising Expense Rent Expense 13,000 1,200 25,000 700 200 1,000 41,000 15,000 20,000 6,200

Locating Problems Using the TB If the error is a multiple of 10, recalculate the account balances. If the error is divisible by 2, look for a value that is half of the error, it may have been entered into the wrong column If the error is divisible by 9, a transposition error might have occurred (eg. 29 has become 92). Find all of the errors in P2-11A