1. 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.

2. Journalizing and Posting

3. 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
Cash
Paid premium on two-year
policy.

4. 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
Cash
Paid premium on two-year
policy.
ACCOUNT
Prepaid Insurance
ACCOUNT NO. 15
Balance
Post. Ref.
Date
Item
Debit
Credit
Debit
Credit
Dec. 1
2005

5. 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 15
Cash
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

6. 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
Cash
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
Dec. 1

7. 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
Cash
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
Dec. 1 2

8. Dec. 1 NetSolutions paid rent for December, $800.14 15 16 17
Rent Expense
Cash
Paid rent for December.

9. Dec. 1 NetSolutions receives $360 for three month’s rent beginning December 1.14 15 16 17
Cash
Unearned Rent
Received advanced payment
For three months’ rent of land.

10. Dec. 4 NetSolutions purchased office equipment on account from Executive Supply Co. for $1,800.18 19 20 21
Office Equipment
Accounts Payable
Purchased office equipment on
account.

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

12. Dec. 11 NetSolutions paid creditors $400.24 25 26 27
Accounts Payable
Cash
Paid creditors on account.

13. 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
Cash
Paid two week’s wages.

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

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

16. 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
Cash
Paid part of amount owed to
Executive Supply Co.

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

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

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

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