Chapter 3 Analyzing Transactions into Debit and Credit Parts

Assets =Liabilities + Owners Equity T- Account 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 Each account will have its own T-account Cash,Supplies,Pre-paid Insurance

Assets= Liabilities + Owners Equity Left Side Right Side Debit Credit Normal Bal... Cash Supplies Prepaid Insurance +- Left SideRight Side Debit Credit Normal Bal... -+

w Please work on work together and “ON your own on page 44)

All companies have a sheet of paper that tell you what all of their accounts are it is called – Chart of Accounts w Assets Cash Supplies Prepaid Insurance Accounts Receivable w Liabilities Accounts Payable w Owners Equity Barbara Trevino, Capital

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?

1. Received cash from owner as an investment $10,000 What two accounts does it effect? CashBarbara Trevino, Capital What types of accounts are they? Asset How is each account balanced changed? Cash Increased Barbara Trevino, Capital increase How is each amount entered into the T- Accounts Owners Equity

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 Cash Barbara Trevino, Capital DebitCredit Normal Bal Received Cash from Owner 10,000 So we say for this transaction we Debit Cash, Credit Capital

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

1. Paid cash for supplies $1,577 What two accounts does it effect? CashSupplies 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

CashSupplies DebitCredit Normal Bal... Normal Bal Paid Cash for supplies 1,577 1,577 So we say for this transaction we Credit cash, Debit Supplies

1. Paid cash for Insurance What two accounts does it effect? CashPrepaid Insurance What types of accounts are they? Asset How is each account balanced changed? Cash Decreases Prepaid Insurance increase How is each amount entered into the T- Accounts

CashPrepaid Insurance DebitCredit Normal Bal Paid Cash for Insurance 1200 So we say for this transaction we Credit cash, Debit PPI

Bought supplies on account from Butler Cleaning Supplies 2,720 What two accounts does it effect? SuppliesButler Cleaning Supplies What types of accounts are they? Asset Liability How is each account balanced changed? Supplies Increase Butler Cleaning Supplies increase How is each amount entered into the T- Accounts

SuppliesButler Cleaning Supplies DebitCredit Normal Bal Bought supplies on account 2,270 So we say for this transaction we Debit supplies, Credit Butler Cleaning Sup

Paid cash on account to Butler Cleaning Supplies 1,360 What two accounts does it effect? CashButler 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

CashButler Cleaning Supply DebitCredit Normal Bal Paid Cash on Account 1360 So we say for this transaction we Credit cash, Debit Butler cleaning supplies

w Please work on “Work together and On Your own” on page 50

Assets= Liabilities + Owners Equity Left Side Right Side Debit Credit Normal Bal.. Cash Supplies Prepaid Insurance +- Left SideRight Side Debit Credit Normal Bal Owners Equity Left SideRight Side Debit Credit Normal Bal Revenue Left SideRight Side Debit Credit Normal Bal Expense

Received Cash from Sales $525 What two accounts does it effect? CashSales What types of accounts are they? Asset Revenue How is each account balanced changed? Cash Increases Sales Increase How is each amount entered into the T- Accounts

CashSales DebitCredit Normal Bal Received Cash from Sales 525 So we say for this transaction we Debit Cash, Credit Sales

Paid Cash for Rent 250 What two accounts does it effect? CashRent Expense What types of accounts are they? Asset Expense How is each account balanced changed? Cash Decreases Rent Expense Increase How is each amount entered into the T- Accounts

CashRent Expense DebitCredit Normal Bal Paid cash for rent $ So we say for this transaction we Credit Cash, Debit Rent Exp.

Paid cash to owner for personal use $100 What two accounts does it effect? CashBen Furman, Drawing What types of accounts are they? Asset Drawing How is each account balanced changed? Cash Decrease Ben Furman, Drawing Increase How is each amount entered into the T- Accounts

CashBen Furman, Drawing DebitCredit Normal Bal Paid cash to owner for personal Use $ So we say for this transaction we Credit Cash, Debit Drawing

Page 58 Prob 3- 1,2,3,4,5

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