1. Introduction to Accounting Preparing for a User’s Perspective
Analyze Transactions and Record Journal Entries
Debits and Credits Trainer
By Kevin C. Kimball, CPA
with support from
Free Jan. 2014
Available on the Google Play Store

2. The Full Accounting Cycle
Original Transaction Entries
Identify
Analyze
Record
Post
Prepare
Pre-adjusted TB
Adjusting Entries
Identify
Analyze
Record
Post
Prepare
Adjusted TB
Financial Statements
Closing Entries
Identify
Analyze
Record
Post
Prepare
Post-Closing TB

3. + - - - + + = + ASSETS LIABILITIES EQUITY Date Account + or – in $
Step 2: the impact of the economic transaction information on the company’s accounts by determining the answer to the following four questions:
Analyze
a) What accounts were affected?
Hint: Use the balance sheet equation to think.
ASSETS =
LIABILITIES +
EQUITY + - - + - +
b) For each affected account, did the account increase or decrease?
c) What is the account’s increase or decrease amount?
d) Will the accounts need to be debited or credited?
Date
Account
+ or – in $
Debit
Credit

4. Date Account G/L Acct # Debit Credit
Step 3: Record the journal entry(ies) to reflect the impact of the information on the company’s accounts determined above in a manner that keeps the balance sheet equation in balance.
Date
Account
G/L Acct #
Debit
Credit
This is the same information that you entered in Step 2.
Each account has its own G/L Acct # for reference purposes.
This is the same information that you entered in Step 2.

5. Original Transaction Entries
Background
On March 1, 20X1, Sue Per Vantastic started a new retail business named Suepervantastic Toy Co. (STC) that buys close-out model toys at steeply discounted prices and resells them through a variety of sales channels. During the month of March 20X1, Sue identified multiple economic transactions (as per Step 1 in the full accounting cycle) but has asked for our help to analyze (Step 2) and record them (Step 3).
Original Transaction Entries
Identify
Analyze
Record

6. + - - - + + = + ASSETS LIABILITIES EQUITY Date Account + or – in $
March 1, X1: Suepervantastic Toy Co. (STC) received a $98,000 cash contribution and a new $2,000 computer in exchange for 1,000 shares of no-par, common stock.
ASSETS =
LIABILITIES +
EQUITY + - - + - +
Date
Account
+ or – in $
Debit
Credit

7. + - - - + + = + ASSETS LIABILITIES EQUITY Date Account + or – in $
March 1, X1: STC purchased a building for $200,000 by paying $40,000 of cash and borrowing the remaining $160,000 under a 10 year note payable with simple interest to be charged at 5% per year to be paid annually. The full principal of the loan is to be repaid at the end of the 10 year period. 
ASSETS =
LIABILITIES +
EQUITY + - - - + +
Date
Account
+ or – in $
Debit
Credit

8. + - - - + + = + ASSETS LIABILITIES EQUITY Date Account + or – in $
March 1, 20X1: Paid $12,000 to insure its building for the next 12 months.     
ASSETS =
LIABILITIES +
EQUITY + - - + - +
Date
Account
+ or – in $
Debit
Credit

9. + - - - + + = + ASSETS LIABILITIES EQUITY Date Account + or – in $
March 2, 20X1: Purchased inventory costing $7,000 on account.
ASSETS =
LIABILITIES +
EQUITY + - - + - +
Date
Account
+ or – in $
Debit
Credit

10. + - - - + + = + ASSETS LIABILITIES EQUITY Date Account + or – in $
March 4, 20X1: Purchased $1,000 of office supplies for cash.
ASSETS =
LIABILITIES +
EQUITY + - - + - +
Date
Account
+ or – in $
Debit
Credit

11. + - - - + + - + - + - - + + - = + ASSETS LIABILITIES EQUITY Date
March 6, 20X1: Sold inventory costing $3,000 to a customer on account for $5,000.
ASSETS =
LIABILITIES +
EQUITY + - - + - +
RETAINED EARNINGS - +
Date
Account
+ or – in $
Debit
Credit
Net Income - + -
REVENUES
EXPENSES - + + -

12. + - - - + + - + - + + - - = + ASSETS LIABILITIES EQUITY 100 100 100 +
March 7, 20X1: Incurred, but didn’t pay yet, a $100 sales commission (i.e. 2% of the sale) to the independent sales contractor who helped generate the March 6th sale.
ASSETS =
LIABILITIES +
EQUITY + - - + - +
100
100
RETAINED EARNINGS - +
Date
Account
+ or – in $
Debit
Credit
100 +
100
100
3/7
Commission Exp.
Net Income - + +
100
100
Commission Pay.
100 -
EXPENSES + -
100

13. + - - - + + = + ASSETS LIABILITIES EQUITY Date Account + or – in $
March 8, 20X1: Paid off $4,000 of the accounts payable it owed from the March 2 inventory purchase.
ASSETS =
LIABILITIES +
EQUITY + - - + - +
Date
Account
+ or – in $
Debit
Credit

14. + - - - + + = + ASSETS LIABILITIES EQUITY Date Account + or – in $
March 10, 20X1: Collected $4,000 from the sale made to the customer on March 6.
ASSETS =
LIABILITIES +
EQUITY + - - + - +
Date
Account
+ or – in $
Debit
Credit

15. + - - - + + = + ASSETS LIABILITIES EQUITY Date Account + or – in $
March 13, 20X1: Invested $5,000 in the stock of ABC Co, a toy manufacturer.
ASSETS =
LIABILITIES +
EQUITY + - - + - +
Date
Account
+ or – in $
Debit
Credit

16. + - - - + + - + - + - + = + ASSETS LIABILITIES EQUITY Date Account
March 28, 20X1: Received a $200 dividend check from ABC Co.
ASSETS =
LIABILITIES +
EQUITY + - - + - +
RETAINED EARNINGS - +
Date
Account
+ or – in $
Debit
Credit
Net Income - +
REVENUES - +

17. + - - - + + - + + - - = + ASSETS LIABILITIES EQUITY Date Account
March 30, 20X1: STC declared and paid a $100 dividend to its stockholder (Sue).
ASSETS =
LIABILITIES +
EQUITY + - - + - +
RETAINED EARNINGS - +
Date
Account
+ or – in $
Debit
Credit -
DIVIDENDs + -

18. + - - - + + - + - + + - - = + ASSETS LIABILITIES EQUITY Date Account
March 31, 20X1: Received a $500 utility bill for the month of March, but to conserve cash, STC has decided not to pay it off until the April 15, 20X1 payment deadline.
ASSETS =
LIABILITIES +
EQUITY + - - + - +
RETAINED EARNINGS - +
Date
Account
+ or – in $
Debit
Credit
Net Income - + -
EXPENSES + -

19. Introduction to Accounting Preparing for a User’s Perspective
Analyze Transactions and Record Journal Entries
Debits and Credits Trainer
By Kevin C. Kimball, CPA
with support from
Free Jan. 2014
Available on the Google Play Store