UNIT #7 - ACCOUNT BALANCES TUTORIAL - INTIAL TUTORIAL - COMPLETED

INSTRUCTIONS FOR UNIT #7

~ Once transactions have been recorded, they have to be noted or recorded in their respective accounts. For example, every transaction has one or more debits and credits to conform to the double entry principle (two sides) and the basic equation (A = L + E). If a company issues stock for cash, then Cash is debited and Capital Stock is credited. Therefore, the cash account is debited and the capital stock account is credited. This process is called posting. ~ In a computerized system, that posting is done automatically as entries are made. This will be illustrated in the accompanying tutorial. As you note the tutorial, you will see the entries "posted" to their respective accounts. ~ As these entries are posted the balance is calculated in each account. Accordingly, each account will have a debit, credit, or -0- balance. Remember in Tutorial #5 many accounts have "normal" balances, debit or credit. ~ Using the tutorial titled Initial, the first column on the left is a set of accounts for journalizing. The accounts and debit and credit columns have been formatted. The columns to the right have been programmed to post these entries to the accounts and record the balances. Since L and E accounts have credit balances, they have been programmed to show non bracketed numbers that are highlighted in red. The default settings are set at -0-. ~ For each of the following enter the amounts in correct cells for the journal entries listed in the columns on the left. As you do this note carefully how the postings are made to the respective accounts (debit and credit columns) on the right. Also note the balance is calculated after each posting. Accounts with credit balances will show non bracketed amounts highlighted in red. After you enter the ten entries, note equality of debits and credits and the equality of debit and credit account balances. This is the idea of a trial balance. ~ The ten entries are: Issuing stock for cash = $ 15,000. Buying equipment for $ 5,000; paying $ 2,000 in cash and $ 3,000 on account. Buying supplies for $ 1,000; paying $ 500 in cash and $ 500 on account. Billing a client for services rendered = $ 15,000. Receiving payment from accounts receivable = $ 5,000. Recording expense: wages = $ 2,000, salary = $ 1,000, and rent = $ 1,000. For these $ 2,000 was paid immediately and $ 2,000 was set up as accounts payable, to be paid later.

INSTRUCTIONS FOR UNIT #7

Purchased prepaid insurance of $ 600; paid cash. Recorded expired (used up) insurance of $ 50. Took an inventory of supplies and determined that $ 400 had been used; recorded that expense. Paid $ 2,000 against accounts payable. ~ Again, note how the postings are made and balances calculated as you make the entries. ~ The tutorial Completed shows the correct amounts, postings, balances, equality of debit and credit balances.