1. Chapter Three The Double-Entry Accounting System Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

2. 3-2 Debit/Credit Terminology =+ DebitCredit Assets DebitCredit Liabilities DebitCredit Equity Claims +++--- In every transaction, the total dollar value of all debits equals the total dollar value of all credits.

3. 3-3 Collins Brokerage Services began the period with the following balances: $5,000 in cash, $4,000 in common stock, and $1,000 in retained earnings.

4. 3-4 Event 1: Collins acquired $25,000 from the issue of common stock. 1.Increase assets (cash). 2.Increase equity (common stock). Asset Source Transaction

5. 3-5 Event 2: Collins purchased $850 of supplies on account. 1.Increase assets (supplies). 2.Increase liabilities (accounts payable). Asset Source Transaction

6. 3-6 Event 3: Collins collected $1,800 as an advance to provide future services over a one- year period starting March 1. 1.Increase assets (cash). 2.Increase liabilities (unearned revenue). Asset Source Transaction

7. 3-7 Event 4: Collins provided $15,760 of services on account. 1.Increase assets (accounts receivable). 2.Increase stockholders’ equity (consulting revenue). Asset Source Transaction

8. 3-8 Event 5: Collins purchased land for $26,000 cash. 1.Increase assets (land). 2.Decrease assets (cash). Asset Exchange Transaction

9. 3-9 Event 6: Collins paid $1,200 cash for a one- year insurance policy with coverage starting August 1. 1.Increase assets (prepaid insurance). 2.Decrease assets (cash). Asset Exchange Transaction

10. 3-10 Event 7: Collins collected $13,400 from accounts receivable. 1.Increase assets (cash). 2.Decrease assets (accounts receivable). Asset Exchange Transaction

11. 3-11 Event 8: Collins paid $9,500 for salaries expense. 1.Decrease assets (cash). 2.Decrease equity (salaries expense). Asset Use Transaction

12. 3-12 The General Journal Accountants initially record data from source documents into a journal. Special Journals General Journals

13. 3-13