Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping1 Balance Sheet DebitCredit ASSETS LIABILITIES & CAPITAL Assets Debit Credit IncreaseDecrease Liabilities & Capital Debit Credit Decrease Increase

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping2 Revenues DebitCredit DecreaseIncrease Expenses DebitCredit IncreaseDecrease

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping3 Balance Sheet - Basic Rules u An account increases on the side of origin u An account decreases on the side opposite of the side of origin u Asset accounts increase on the debit side and decrease on the credit side u Liability and Capital (or Equity) accounts increase on the credit side and decrease on the debit side u Revenue accounts increase on the credit side and decrease on the debit side u Expense accounts increase on the debit side and decrease on the credit side

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping4 Analyzing a Transaction June 1Tom Cartier invests $ 80,000 cash in his new business. Analysis Rule Entry The asset account Assets increase onDebit:Bank Bank is increased. the debit side. The capital accountOwner’s equityCredit:Capital is increased.increases on the credit side. T.Cartier

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping5 Analyzing a Transaction June 1Tom Cartier invests $ 80,000 cash in his new business. Here is the effect on the accounting equation: Assets=Liabilities+ Capital $80,000= 0+ $80,000

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping6 Analyzing a Transaction Analysis Rule Entry The asset account Assets increase on Debit:Land Land is increased. the debit side. The capital accountAssets decrease on the Credit: Bank Bank is increased.the credit side. June 3Land was bought as a future building site. A cheque was issued for $ 25,000

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping7 June 3Land was bought as a future building site. A cheque was issued for $ 25,000 Here is the effect on the accounting equation: Assets =Liabilities+ Capital Cash Land $80,000 = 0+ $80, ,000 $25,000 $55, ,000 = 0+ $80,000

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping8 June 7Constructed a small building, $100,000. paid $30,000 down and arranged for a $70,000, 15-year mortgage. Analysis Rule Entry The asset account Assets increase on Debit:Building Building is increased. the debit side. The asset accountAssets decrease on the Credit: Bank Bank is decreased.the credit side. The liability accountLiabilities increase Credit: Mortgage Mortgage Payable on the credit side. Payable is increased.

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping9 June 8Bought equipment for the store, $5,000, from Strands Office Equipment Co. on terms of net 10 days. Analysis Rule Entry The asset account Assets increase on Debit: Office Equipment is the debit side. Office Equipment increased. The liability accountLiabilities increase on the Credit: Accounts Payable/ the credit side. Accounts Payable/ Strands Office Equipment Strands Office Co. is decreased Equipment Co.

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping10 June 10Bought merchandise (venatian blinds) for an upcoming sale; paid $8,000 cash. Analysis Rule Entry The expense account Expense increase on Debit: Purchases is the debit side. Purchases increased. The assest accountAssets decrease on the Credit: Bank is decreased.credit side. Bank

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping11 June 18A payment of $5,000 was made to Strands Office Equipment Co. in full payment of the balance owing to it. Analysis Rule Entry The liability account Liabilities decrease on Debit: Accounts Payable/ the debit side. Accounts Strands Office Equip.Co.Payable/Strands is decreased.Office Equip.Co. The assest accountAssets decrease on the Credit: Bank is decreased.credit side. Bank

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping12 June 20Cash sales of merchandise for the month, $5,500. Analysis Rule Entry The asset account Assets increase on Debit: Bank Bank is increased. the debit side. The revenue account Revenues increase on the Credit: Sales is increased. credit side. Sales

Prepared by Gorian Surlan; Source: Barker.B. Basic Bookkeeping13 June 30Issued a cheque to pay the June telephone bill, $145. Analysis Rule Entry The expense account Expenses increase on Debit: Telephone Expense the debit side. Telephone is increased. Expense The asset account Assets decrease on the Credit: Bank is decreased.credit side. Bank