CHAPTER 1:THE ACCOUNTING EQUATION AND THE BALANCE SHEET

What is Accounting?
Book Definition:

“The process of Identifying, measuring and communicating economic information to permit informed judgments and
decisions by the users of information.”

Definition 2:

The process of recording, classifying, summarizing and interpretingfinancial information in terms of events involving
money in order to provide people with necessary information (Reports) for further decision making.

If we analyze this definition, we get the following components:

 It is about recording transactions

 Categorization/classifying transactions in order to make them more meaningful.

 Summarizing results briefly

 Interpreting the financial information in terms of different reports according to the users of information (e.g.
Owner – Balance sheet etc.)

 Transactions should be only of financial nature.

 The recorded transactions are then classified according to set rules

 Results are then interpreted for people who are interested in this information

Accountants capture and record all thetransactions, operations, and activities that have financialconsequences for a
business. Accountants are also involved in otheractivities in finance that impact a business, such as weighing thecosts of
new ventures, participating in strategies for mergers and acquisitions,quality management, tracking financial performance,
aswell as tax strategy.

DIFFERENCE BETWEEN BOOK-KEEPING AND ACCOUNTING:

 Book keeping is mainly concerned with record keeping or maintenance of books of account. It includes
identifying the financial transactions, measuring them in terms of money, recording them in the books of original
entry and then classifying them into ledger.

 Accounting is more than Book-keeping. Apart from the standard practices of Book-keeping it involves
summarizing the classified information in the form of Profit and Loss Account and Balance Sheet, drawing
meaningful information from them and communicating this information with the interested parties i.e.
stakeholders.

 ‘Booking keeping’ is a part of accounting as it only involves recording of economic events.

AIMS & OBJECTIVES OF ACCOUNTING:

Accounting has many objectives including letting people and organizations know:
  To keep a systematic record of business transactions

 To calculate Profit and Loss

 What the business worth

 To ascertain the financial position of the business

 How much they owed?

 How much they borrowed?

 To provide financial information to different users of this information.

WHO ARE USERS OF ACCOUNTING INFORMATION?

STAKEHOLDER:

“A person, group or organization that has interest or concern in an organization and can either affect or be affected by
the business.”

These stakeholders or users might include:

 Owner/Shareholders: How much profit?

 Managers: How business performed and how they can improve the performance in future

 Employees: To know the profits so that they could demand better wages?

 Investors: Is it safe and profitable to invest in the business? (Banks or Other interested investors)

 Suppliers: Will the business be able to pay for their supplies?

 Government: How much tax should be collected?

 Lenders: It is safe to lend money to the business?

BUSINESS ENTITY CONCEPT:

According to this concept, the business is considered as a separate business entity from its owner(s). Thus the financial
information of the business will be recorded and reported separately from its owner’s personal financial information.

CONDITIONS FOR CONSIDERING A MONETARY EVENT AS “TRANSACTION”

1. There must be Two Parties Involved
2. The event must beMeasurable in Terms of Money.
3. The Event must result in Transfer of Property and Service.
4. The events must Change the Financial Position of the Business.
 CLASSIFICATION OF TRANSACTIONS IN ACCOUNTING:
There are three main categories of transactions in business.
1. Cash Transactions
2. Credit Transactions
3. Paper Transaction

1. CASH TRANSACTIONS:

If the value of a transaction is met in Cash Immediately, Then the transaction is called “Cash Transaction”.

Identification:

The Word “Cash” or “For Rs.”Are mentioned in the transaction.

Example: ABC Company bought Goods for Cash Rs. 100.

2. CREDIT TRANSACTION:

If the Value of a transaction is NOT met in cash immediately, rather, the value is promised on a legal paper to meet on a
future date.

Identification:

The word “On Credit” is mentioned in the transaction.

Example:Aslam Bought Building of Rs. 20000 on Credit.

Credit Transactions are further divided into 2 types.

Credit
Transactions

Account
Account
Receivables/
Payable/Creditors
Debtors

ACCOUNT PAYABLES/ CREDITORS:

If the business “GETS” something of value from a party but in return the Business “GIVE ITS WORD” on a legal paper
stating payment on a future date. Now, It is an obligation (Liability) of the business to fulfill its promise. These kinds of
promises are called as “Account Payables/ Creditors”. Account Payables are always treated as “Liability” to a Business.

ACCOUNT RECEIVABLE / DEBTORS:

If the business “GIVES” something of value to a party but in return the Party “GIVE ITS WORD” on a legal paper
stating payment on a future date. Now, it is an obligation of the party to fulfill its promise. These kinds of promises are
called as “Account Receivables/ Debtors”. Due to their legal identity and conversion ability, Account Receivables are
always treated as “Asset” to a Business.
 3. PAPER TRANSACTIONS:

When there is no question of meeting the value of a transaction, then those transactions are called Paper Transactions.

For Example, if a business lost goods in theft, due to fire or any other disaster then “in return”, the business does not get
anything back. So, those paper transactions (i.e Incident Report) are treated as “Decrease in Capital” of the owner.

INTRODUCTION TO THE ACCOUNTING EQUATION:

From the large, multi-national corporation down to the corner beauty salon, every business transaction will have an effect
on a company's financial position. The financial position of a company is measured by the following items:

1. Assets (what it owns)

2. Liabilities (what it owes to others)

3. Owner's Equity (the difference between assets and liabilities)

THE ACCOUNTING EQUATION (or basic accounting equation) offers us a simple way to understand how these
three amounts relate to each other. The accounting equation for a sole proprietorship is:

ASSETS = CAPITAL + LIABILITIES

The accounting equation for a corporation is:

ASSETS are a company's resources—things the company owns. Examples of assets include cash, accounts
receivable, inventory, prepaid insurance, investments, land, buildings, equipment, and goodwill. From the accounting
equation, we see that the amount of assets must equal the combined amount of liabilities plus owner's (or stockholders')
equity.

CAPITAL: Resources provided by the owner to business. It is often called as Equity as well.

LIABILITIES are a company's obligations—amounts the company owes. Examples of liabilities include notes or
loans payable, accounts payable, salaries and wages payable, interest payable, and income taxes payable (if the company
is a regular corporation).

Resources of a Business can be explained through accounting equation as;

Resources of the business = Who provided them

ASSETS (What are the resources a business HAS) = CAPITAL + LIABILITIES (Who supplied them or
to whom business OWES)

BALANCE SHEET
“A balance sheet is a statement of a firm's assets, liabilities and owners' equity at a specific date (i.e. it is a
"snapshot" of the financial strength of a business at a particular moment in time).”

Like the accounting equation, it shows that a company's total amount of assets equals the total amount of liabilities
plus owner's (or stockholders') equity.

CAPITAL = ASSET - LIABILITIES

CHAPTER 2: MAKING OF ACCOUNTS AND DOUBLE ENTRY SYSTEM:

Instead of constantly drawing up balance sheets after each transaction what we have instead is Double Entry
System.

DOUBLE ENTRY:

Double entry is the fundamental concept underlying present-day bookkeeping and accounting. Double-entry accounting is
based on the fact that every financial transaction has equal and opposite effects in at least two different accounts. It is used
to satisfy the equation Assets = Liabilities + Equity, in which each entry is recorded to maintain the relationship.

BREAKING DOWN 'DOUBLE ENTRY':

In the double-entry system, transactions are recorded in terms of debits and credits. Since a debit in one account will be
offset by a credit in another account, the sum of all debits must therefore be exactly equal to the sum of all credits. The
double-entry system of bookkeeping or accounting makes it easier to prepare accurate financial statements directly from
the books of account and detect errors.

In double entry system, we make separate accounts/Registers (commonly known as T Accounts) for the both
aspects of the transaction.

What is a 'T-Account'

A T-account is “an informal term for a set of financial records that use double-entry bookkeeping.” The term T-account
describes the appearance of the bookkeeping entries. If a large letter T were drawn on the page, the account title would
appear just above the T, debits would be listed under the top line of the T on the left side and the credits would be listed
under the top line of the T on the right side, with the middle line separating the debits from the credits.

BREAKING DOWN 'T-Account'

In double-entry bookkeeping, a widespread accounting method, all financial transactions are considered to affect at least
two of a company's accounts. Because of this, the credits and debits on each side of the T account must match. If a
bookstore sold $20 worth of books, it might debit its cash account $20 and credit its books or inventory account $20. This
double-entry system shows that the company now has $20 more in cash and a corresponding $20 less in books.

“Every business transaction brings about at least a double change in the financial position of a business.”

These two changes may take place in any one or two basic elements of accounting.

THE IS NO EXCEPTION TO THIS PRINCIPLE

For Example: On September 15, 2017, Mr. Ali purchase machinery worth Rs. 100,000 from ABC Enterprise. This is a
Business transaction. It will bring two changes.

First, the business GETS machinery in the form of Asset.

At the same time business LOSES Cash from its Asset. These gain and lose are also known as “Debit” and “Credit”.

DEBIT: Recording the “GAIN or DECREASE IN LIABILITY” aspect of a transaction, written on the left hand side of
T account. In lay man terms when a business receives you DEBIT.

CREDIT:Credit Side records the “LOSS or INCREASE IN LIABILITY” aspect of a transaction is called credit. It is
Written on the Right hand side of the T account. In short, when a business loses, you credit.

MAIN GROUPS OF TRANSACTIONS IN DOUBLE ENTRY SYSTEM:

There are 5 broader groups of transaction.

1) Introduction or drawings of “CAPITAL”:

 It is the source of Funds provided by the owner/owners of the business.

2) Buying and selling of “ASSETS”:

Consists of property of all kinds such as buildings,machinery,stocks of goods, motor vehicles, cash in bank and
debtors.

3) Increase or Decrease of “LIABILITIES”:

Includes amount the business owes to other firms or persons for goods/services supplied to the business and for
expenses incurred by the business that have not yet been paid. Liabilities also include loans taken by the
business.

4) EXPENSES:

Formal Definition: Decrease in owner's equity resulting from the cost of goods, fixed assets, and services and
supplies consumed in the operations of a business.

Informal Definition: The costs of doing business. The stuff we used and had to pay for or charge to run our
business.E.g Building, utility Bills, Employee Salaries etc.

5) REVENUE:

Formal Definition: The gross increase in owner's equity resulting from the operations and other activities of the business.

Informal Definition: Amounts a business earns by selling services and products and investing. Amounts billed to
customers for services and/or products.

POINTS TO REMEMBER:

Account title INCREASE DECREASE

Assets Debit Credit

Expenses Debit Credit

Capital Credit Debit

Liability Credit Debit

Revenue Credit Debit

FORMAT OF A T ACCOUNT:

Title of the Account

Date Debit Credit Balance

(Reference) Amount (Reference) Amount

T- ACCOUNTS OF MAJOR GROUPS OF TRANSACTIONS

A FURTHER WORKED EXAMPLE

 ACTIVITY TRANSACTIONS:
TRANSACTION 1:On September 1, 2017, The Owner Gave “ABC Company” Cash of 300,000 as
Capital to Start the Business.
So for this particular transaction, we will make 2 registers or T Accounts of “Capital” and “Cash” and we will record
the transaction as;

Capital

Date Debit Credit Balance

Sep, 1 (Owner Invested in Business)300,000 300,000

Cash

Date Debit Credit Balance

Sep 1 (Capital) 300,000 300,000

TRANSACTION 2: On September 15, 2017, Mr. Ali purchase machinery worth Rs. 100,000 from ABC
Enterprise. This is a Business transaction. It will bring two changes.
 Cash

Date Debit Credit Balance

Sep, 1 (Capital) 300,000 300, 000

Sep, 15 (Machinery) (100,000) 200,000

Machinery

Date Debit Credit Balance

Sep, 15 (Cash) 100,000 100,000

CATEGORIES OF MAIN HEADS OF ACCOUNTING TRANSACTIONS

ASSETS:
Definition 1: An asset is a resource with economic value that a business owns or controls with the expectation that it will provide
future benefit.

Definition 2:

Properties /Possessions of a Business in both Tangible (Having physical existence) and Non Tangible (Have No physical
Existence) forms are called Assets.
Categories of Assets = 2

1- Current Assets
2- Non Current/Fixed Assets)
 2- NON-CURRENT/ FIXED ASSETS

1- CURRENT ASSETS:
(Also Called Long Term Assets)

Current assets are balance sheet accounts that represent the value
What is a 'Fixed Asset'
of all assets that can reasonably expect to be converted into cash
within one year.
A fixed asset is a long-term tangible or In Tangible piece of
Current assets include cash and cash equivalents, accounts
property that a firm owns and uses in the production of its
receivable (Debtors), inventory, marketable securities, prepaid
income and is not expected to be consumed or converted into
expenses and other liquid assets that can be readily converted to
cash any sooner than at least one year's time.
cash.

Titles of Transactions:
Titles of Transactions:

 Building
• Cash in Hand
 Land
• Cash at Bank
 Lease Agreements
• Marketable securities
 Plant and Machinery
• Bills Receivable (Debtors)
 Furniture and Fixtures
• Stock and Trade
 Trademarks, License, Copyright, Patent or Goodwill
• Inventory/Goods Available in Warehouses
 Computer Equipment
• Prepaid Expenses
 Office Equipment
• Advances to Others
 Software
 Vehicles
 Long-Term Investments
 Other

LIABILITIES
Definition1: Liabilities are the legal debts or obligation of a business.

Definition 2: A liability is a company's financial debt or obligations that arise during the course of its business operations. Liabilities
are settled over time through the transfer of economic benefits including money, goods or services. Recorded on the right side of the
balance sheet, liabilities include loans, accounts payable, mortgages, deferred revenues and accrued expenses.
Categories of Liabilities = 2

1- Current Liabilities
2- Non Current/Longterm Liabilities)

1- CURRENT LIABILITIES:
2- NON-CURRENT/ LONG-TERM LIABILITIES:

Current liabilities are debts payable within one year

Long-term liabilities, in accounting, form part of a section of the
balance sheet that lists liabilities not due within the next 12
Titles of Transactions:
months.

• Creditors (Accounts Payables)

Titles of Transactions:
• Bills Payable
• Bank Overdraft
• Outstanding expenses • Long Term Loans
• Income Tax payable • Capital Reserve
• Advances from customers • Provisions Like Provision for Tax, Dep.

• Equity Share Capital

• Preference Share Capital
• Debentures

REVENUE
Formal Definition: The gross increase in owner's equity resulting from the operations and other activities of the business.

Informal Definition: Amounts a business earns by selling services and products and investing. Amounts billed to customers for
services and/or products.

Categories of Revenue = 2

(1- Operating Revenue &

(2- Non-Operating Revenue &Gains)

1- OPERATING REVENUE: 2- NON-OPERATING REVENUE &GAINS:

Revenues resulting from the normal operations of a business such as Non-operating revenue accounts include all types of income that
the revenues resulting from the sale of products and services to your you receive that are not part of your main line of business. In
customers. other words, revenues or gains resulting from something other
than from normal business operations.
Titles of Transactions:
Titles of Transactions:
 Sales
 Products  Interest Income
 Services  Dividends
 Sales Discounts (Contra-Revenue Account)  Commissions
 Sales Returns and Allowances (Contra-Revenue Account)  Rental Income
 Gain On Sale Of Assets
 Gains -Other Unusual

EXPENSES:
Formal Definition: Decrease in owner's equity resulting from the cost of goods, fixed assets, and services and supplies consumed in
the operations of a business.

Informal Definition: The costs of doing business. The stuff we used and had to pay for or charge to run our business.
Categories of Expenses = 4

(1- Operating/ Revenue Expenses

(2- Capital/ Non Current Expenses
(3- Non-Operating Expenses,
(4- Cost of Sales or Cost of Goods Sold)

1- OPERATING / REVENUE EXPENSES (OPEX)

The expenses related to normal daily operationsfor the

current accounting period such as wages, rent, advertising,
insurance, etc.

These expenses are related to the normal operations of the

business (primary activities) and are incurred in order to earn
normal operating revenues. In other words, amounts spent on
products and services related to normal business operations.
2- CAPITAL EXPENSES (CAPEX):
While not absolutely necessary, the Operating Expenses are
often grouped into two main functional areas of operation: The Costs or Amounts Spent to acquire or to improve a long
term/ non Current Asset is called Capital Expenses.
 Selling Expenses
Selling Expenses are expenses incurred and related to Titles of Transactions:
making sales. Examples are sales salaries & wages, fringe
benefits, advertising, travel, entertainment, catalogues,  Land
rent, utilities, telephone, commissions, warehousing,  Building
shipping, depreciation, office supplies, postage, etc.  Building Expansion
 General and Administrative Expenses (G&A)  Capital Leases
G & A Expenses are related to the general operations or  Computer Equipment
overall administration of the business. Examples are  Upgradation of Computer Equipments
administrative salaries & wages (officers, office,  Office Equipments
accounting, management, and human resources), fringe  Upgradation of Office Equipments
benefits, supplies, rent, utilities, telephone, travel,  Furniture & Fixtures
entertainment, depreciation, office supplies, postage, legal  Machinery
& accounting fees, etc.  Capacity Upgradation of Machinery
 Transportation Charges (Freight Ins to Bring the New
The following listing of types of expenses, where needed, can be Machinery to the Business)
used and included in both groups. There are no rigid rules as to  Software Purchase
the order that the operating expenses are listed within a category.  Upgradation of Software
 Vehicles (Vans, Trucks etc.)
Titles of Transactions:  Capacity Enhancements of Vehicles
 Intangible Asset purchases (License, Trademark, Patents)
 Salaries and Wages
 Salaries - Other
 Salaries - Officers
 Wages - Regular
 Wages - Overtime
 Incentive Pay
 Commissions
 Bonuses
 Severance Pay
 Required Payroll Related Expenses
 Employer FICA
  Employer Medicare
 Workers’ Compensation
Insurance
 Federal Unemployment
 State Unemployment
 Fringe Benefits
 Vacation Pay
 Holiday Pay
 Sick Pay
 Other Paid Leave
 Parking
 Meals
 Employer Provided Health
Insurance
 Employer Provided Life
Insurance
 Employer Provided 401 K
Contributions
 Employer Provided IRA
Contributions
 Employer Provided Pensions
& Retirement
 Other Employer Provided
Benefits
 Employee Recruitment
 Travel
 Lodging
 Meals
 Other
 Entertainment
 Advertising
 Employment Agency Fees
 Temporary Help
 Cash Over / Short
 Supplies Expense
 Operating Supplies
 Maintenance Supplies
 Cleaning Supplies
 Office Supplies
 Computer Supplies
 Other Supplies
 Rent Expense
 Land
 Buildings
 Equipment
 Vehicles
 Other
 Leasing Installments Expense
 Land
 Buildings
 Equipment
 Vehicles
 Other
 Repairs & Maintenance
  Buildings
 Grounds
 Equipment
 Office
 Store
 Manufacturing
 Vehicles
 Other
 Vehicle Operating Expenses
 Delivery Expenses
 Insurance Expense
 Building & Contents
 Vehicles
 Business Interruption
 Casualty
 Product Liability
 Professional Liability
 Other
 Fees , Licenses, and Permits
 Security
 Janitorial Services
 Uniforms
 Bank Charges and Fees
 Credit Card Fees
 Postage
 Cleaning
 Memberships
 Subscriptions
 Training and Education
 Tuition and Fees
 Transportation
 Lodging
 Meals
 Other
 Travel
 Travel - Overnight
 Lodging -
Overnight
 Transportation -
Overnight
 Meals - Overnight
 Other - Overnight
 Travel - Local
 Lodging - Local
 Transportation -
Local
 Meals - Local
 Other - Local
 Entertainment
 Meals
 Gifts
 Events
 Other
 Catalogues and Publications
 Advertising
 TV Ads
 Radio Ads
 Newspaper & Magazine Ads
 Internet Ads
 Website
 Promotional Events
 Other
 Royalties
 Franchise Fees
 Professional Fees
 Legal
 Auditing
 Accounting
 Tax Preparation
 Consulting
 Other
 Utilities
 Electricity
 Gas
 Water
 Garbage Collection
 Other
 Telephone
 Internet Access & Services
 Credit and Collections
 Bad Debts Expense
 Collection Expense
 Credit Reports &
Background Checks
 Depreciation Expense
 Depreciation - Vehicles
 Depreciation - Buildings
 Depreciation - Building
Improvements
 Depreciation - Machinery
and Equipment
 Depreciation - Office
Equipment
 Depreciation - Computer
Equipment
 Depreciation - Vehicles
 Depreciation - Furniture &
Fixtures
 Depreciation - Computer
Software
 Depreciation - Other
Property, Plant, or
Equipment
 Amortization
 Amortization - Leasehold
Improvements
 Amortization - Goodwill
  Amortization - Organization
Costs
 Amortization - Other
 Property Taxes
 Personal Property
 Real Property

4- NON-OPERATING EXPENSES AND LOSSES

3- COST OF SALES OR COST OF GOODS SOLD Amounts spent on products and services not related to normal
Cost of Goods Sold - the cost of the products purchased or
business operations (secondary activities). In other words,
manufactured and sold by a business.
expenses and losses resulting from something other than from
normal business operations.
Titles of Transactions:
Titles of Transactions:
i. Cost Of Goods Purchased and Sold
1. Purchases o Donations
A temporary account used in the periodic inventory
o Penalties & Fines
system to record the purchases of merchandise for
o Loss On Sale Of Assets
resale. This account reports the gross amount of
o Losses - Other Unusual
purchases of merchandise.
o Interest
2. Net purchases is the amount of purchases minus
o Taxes
purchase returns, purchase allowances, and purchase
 Franchise & Excise Taxes
discounts. While the Purchases Accounts are normally
 Federal Income Taxes
classified as temporary expense accounts, they are  Other Taxes
actually "hybrid" accounts. The purchase accounts are
used along with freight and the beginning and ending
inventory to determine the Cost Of Goods Sold.
3. Purchase Discounts (Contra Account)
4. Purchase Returns and Allowances (Contra
Account)
5. Freight
ii. Cost Of Goods Manufactured and Sold

OTHER FREQUENT TRANSACTIONS:

DEBTORS: People/firms who owe money to the business. Included as assets.

CREDITORS: people/firms to whom the business owes money. Included as liability.

PURCHASE: Something a business buys with the prime intention of selling. If a ice cream company buys van for selling
ice creams, the van would not be included in the purchase account, rather a new account “Motor vehicle” would be made.

SALE:sale of those goods which were bought with the prime intention of selling and in which the business normally deals
in e.g ice cream sold by the ice cream company. Selling the van (mentioned above) would not be included in sales.

PURCHASE RETURN: When the business returns back, items purchased, to the supplier due to faults or low quality
,etc

SALES RETURN: When customers return back, items sold, to the business.

DRAWING: Money drawn out of the business by the owner for personal use.

CARRIAGE = The cost to the business of delivering goods to its customers or having goods delivered by its suppliers
RETURNS = Goods/stock sent back to the business by its customers or goods/stock the business sends back to its
suppliers

PREPAYMENT = An expense paid in advance (part of next year’s or next month’s)

ACCRUAL = An expense that has not been paid (Some of this years)

EXERCISE 1

ABC Company was incorporated on January 1, 2017 with an initial capital of 5,00000 shares of common stock
having $20 par value. During the first month of its operations, the company engaged in following transactions:

Date Transaction
Jan 2 An amount of $36,000 was paid as advance rent for three months.
Paid $60,000 cash on the purchase of equipment costing $80,000. The remaining amount was recognized as a one
Jan 3
year note payable with interest rate of 9%.
Jan 4 Purchased office supplies costing $17,600 on account.
Jan 13 Provided services to its customers and received $28,500 in cash.
Jan 13 Paid the accounts payable on the office supplies purchased on January 4.
Jan 14 Paid wages to its employees for first two weeks of January, aggregating $19,100.
Provided $54,100 worth of services to its customers. They paid $32,900 and promised to pay the remaining
Jan 18
amount.
Jan 23 Received $15,300 from customers for the services provided on January 18.
Jan 25 Received $4,000 as an advance payment from customers.
Jan 26 Purchased office supplies costing $5,200 on account.
Jan 28 Paid wages to its employees for the third and fourth week of January: $19,100.
Jan 31 Paid $5,000 as dividends.
Jan 31 Received electricity bill of $2,470.
Jan 31 Received telephone bill of $1,494.
Jan 31 Miscellaneous expenses paid during the month totaled $3,470
REQUIRED
Open the following accounts, with the balances indicated, in the ledger of ABC Company. Use the three-
column ledger format.
EXERCISE 2

The XYZ company started business on June 6, 2017. The business was started with $300,000. The
transactions they engaged in during their first month of business are below:

Date Transaction
June 8 An amount of $50,000 was paid for six months of rent.
Equipment costing $100,000 was purchased using $40,000 cash. The remaining amount
June 9
of $60,000 is a one year note with an interest rate of 3.4%
June 10 Office supplies were purchased totaling $25,000 on account.
June 16 Received $39,400 in cash for services rendered to customers.
June 16 Paid the account for office supplies purchased June 10.
 $63,900 worth of services were given to customers. Received cash amount of $43,700.
June 20
Customers promised to pay remaining amount of $20,200.
June 21 Paid employees’ wages for June 8-June 21. Wages totaled $23,500.
June 21 Received $20,200 in cash for services rendered to customers on June 20.
June 22 Received $6,300 in cash as advanced payment from customers.
June 27 Office supplies were purchased totaling $3,500 on account.
June 28 Electricity bill received totaling $1,850.
June 28 Phone bill received totaling $2,650.
June 28 Miscellaneous expenses totaled $4,320.

REQUIRED
Open the following accounts, with the balances indicated, in the ledger of ABC Company. Use
the three-column ledger format.