2301 chapt 02 trans analysis

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Chapter 2: Transaction Analysis

1 Analyzetransactions

2 Understand how accounting wor


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3 Recordtransactions in journal en


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4 Usea trial balance

5 Analyzetransactions using "T-ac


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Page 64

ks


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tries


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ounts"


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1 Analyzetransactions

Every transaction has two sides

You give something

You receive something

in account ing we record both


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An account.

is the record of all changes in

asset, liability, or equity acc

a period


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Assets

Cash

Accounts receivable

Notes receivable

Inventory

Prepaid expenses

LandBuildings

Equipment, Furniture and F

Liabilities

Accounts payable

Notes payable

Accrued liablities

Unearned revenue


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Stockholders equity

Common stock

Retained earning

Revenues

Expenses

Dividends

Analyze transactions


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Tranactions 1

Assets = Liabilities +

50,000

Cash

issu e $50,000 of common s tock to sh areholder

Tranactions 2


Cash (40,000) = -

Land 40,000 = -

pays $40,000 for land for a new loc at ion


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Tranactions 3


3,700 = 3,700supplies accounts payable

buys $3,700 sup pl ies on acoun t

Tranactions 4



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7,000 = -

Cash

earn $7,000 of servic e revenu e and co llects ca

Tranactions 5


3,000 = -

accounts receivable

performs $3,000 of service on account--- custo


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Tranactions 6


Cash (1,100) = -

Cash (1,200) =Cash (400) =

Pays for r ent, salar ies and uti l i t i es

Tranactions 7


(1,900) = (1,900)


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cash accounts payable

pays $1,900 on accoun t

Tranactions 8


major shareho lder pays $30,000 to remodel his


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Tranactions 9


Cash 1,000 = -

Acct rec (1,000) = -col lects $1,000 for services p erform ed on acco

Tranactions 10


Cash 22,000 -


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land (22,000) -

Sells some of the land for $22,000

Tranactions 11


Cash (2,100) -

Pay $2,100 for d ivid ends


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Page 65

Page 65

sides o f a transact ion


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Page 64

a particular

ount during


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Page 65

xtures

Page 66


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Page 66

Page 67


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Equity

50,000

Common Stock

Page 68Equity

-

-


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Page 68

Equity

-

Page 69

Equity


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7,000

Service revenue

h

Page 69

Equity

3,000

Service revenue

mer wi l l pay later


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Page 70

Equity

(1,100) rent expense

(1,200) salary expense(400) utilities expense

Page 70

Equity

-


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Page 70

Equity

home


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Page 70

Equity

-

-un t

Page 71

Equity

-


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-

Page 71

Equity

(2,100)


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page 72

=

Cash Acct Rec Supplies Land

1 50,0002 (40,000) 40,000

3 3,700

4 7,000

5 3,000

6 (1,100)

(1,200)

(400)

8 (1,900)

9 1,000 (1,000)

10 22,000 (22,000)

11 (2,100)

33,300 2,000 3,700 18,000

57,000

ASSETS


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Genie Car Wash, Inc. page 64

Income Statement

Month ended April 30, 2009

Revenues

Service revenue ($7,000 + $3,000) 10,000$

Expenses

Salary expense 1,200$

Rent expense 1,100

Utilities expense 400

Total expenses 2,700

Net Income 7,300$


Statement of Retained Earnings

Month ended April 30, 2009


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Retained earnings, April 1, 2009 -$

Add: Net Income 7,300

7,300Less: Dividends (2,100)

Retained earnings, April 30, 2009 5,200$


Balance Sheet

April 30, 2009

Assets Liabilities

Cash 33,300$ Acc Pay.

Acct Rec. 2,000

Supplies' 3,700 Stockholders

Land 18,000 Common stoc

Retained Earn

Total Equity


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Total Assets 57,000$ Total Liabiliti


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Liabilities +

Acct Pay Com Stk Ret Earn

50,000

3,700

7,000

3,000

(1,100)

(1,200)

(400)

(1,900)

(2,100)

1,800 50,000 5,200

1,800 55,200

57,000

Equity


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1,800$

quity

k 50,000

ings 5,200

55,200


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s & Equity 57,000$


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2 Understand how accounting wor

All business transactions include two

You give something

you receive something


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Accounting is based on a "dual entry"

system

Each transaction effects at least tw

Accounts can be represented by


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thel letter T. We call them T-acco

The account "cash" would appear as:

lef t s ide r igh t s ide

Deb it Cred it

Cash


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the lef t sideof each account

is the debi t s ide

the r ight s ideof each account

is the credi t s ide

Every business transaction involves

a debit and a credit


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the debit ---> what you received

the credit ---> what you gave

Rules for increases and decreases

in the accounts

Assets increased by debits

decreased by credits

Liabilities increased by credits

& Equity decreased by debits


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=

+ deb its + cred its

- cred its - deb its

Assets Liabilities


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ks Page 77

parts Page 77


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Page 77

accounts

Page 77


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n ts.

Page 77


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Page 77

Page 77


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Page 77


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+ Equity


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= +

Cr Dr Cr credit (cr) - + Dr

s ide -

+ -

= +

Cr Dr Cr

credit (cr) - + Drs ide -

+ -

Dr Cr Dr

Assets Liabilities

Dr Contributdebit (dr)

s ide

debit (dr)s ide

Revenues Expe

Assets Liabilities S

Dr Contribut


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- + +


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Cr Dr Cr

+ - +

Cr Dr Cr+ - +

Cr Dr Cr

hareholder's Equity

d Capital Retained Earning

Dividendsnses

hareholder's Equity

d Capital Retained Earning


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- + -


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3 Recordtransactions in journal en

1 Specify each account affected

and classify as to "account ty

2 Determine whether each acco

or decreased by the transactio

3 Record the transaction in the j

side and credit side with a bri

The Ledger

a grouping of all accounts

entering a transaction in the jour

data into the ledger

data must be copied to the ledger

a process called . post ing


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Journal Entry

t ransact ion 1

Cash

Common Stock

i ssued common stock

Account and explanationDate

Apr 2


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Journal Entry

t ransact ion 2

Land

Cash

purch ase Land with cash

Journal Entryt ransact ion 3

Supplies

Acct Payable

Date Account and explanation



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purch ase suppl ies on account


Cash

Service revenue

so ld servic es for cash $7000

Journal Entry

t ransact ion 5

Account receivable




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Service revenue

so ld services $3000 on acco unt

Journal Entry

t ransact ion 6

Rent expense

Salary expense

Utilities expense

Cash

pay rent, salary, and uti l i t ies expense



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Journal Entry

t ransact ion 7

Account payable

Cash

paid cash on account





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no entry

Journal Entry

t ransact ion 9

CashAccounts receivable

col lect cash on account

Journal Entry



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t ransact ion 10

Cash

Landsold land


Dividends

Cash

declared and paid c ash div idends




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tries page 80

by the transaction

e"

nt is increased

n

urnal -- debit

f explanation

Page 81

al does not get the


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page 82

Debit Credit

50,000

50,000


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page 83

Debit Credit40,000

40,000

page 83

Debit Credit3,700

3,700


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page 83

Debit Credit7,000

7,000

page 84

Debit Credit3,000


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3,000

page 84

Debit Credit1,100

1,200

400

2,700


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page 85

Debit Credit1,900

1,900

page 85

Debit Credit


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page 85

Debit Credit

1,0001,000

page 86


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Debit Credit22,000

22,000

page 86

Debit Credit2,100

2,100


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1 50,000 2 40,000 7 1900 3 3700

4 7,000 6 2,700 1,900 3,700

9 1,000 7 1,900 1,800

10 22,000 11 2,100

80,000 46,700

33,300

5 3000 9 1000

3,000 1,000

2,000

3 3700

3,700

2 40000 10 22000

40,000 22,000

18,000

Genie Car Wash, Inc. Page 88

Cash

= +

Act Payable

Act Rec

Supplies

Land

ASSETS LIABILITIES


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Trial Balance

April 30, 2010

Debit Credit

Assets

Cash 33,300

Accounts Receivable 2,000

Supplies 3,700

Land 18,000

Liabilities

Accounts Payable 1,800Stockholders Equity

Common Stock 50,000

Revenues

Service revenue 10,000

Expenses

Rent expense 1,100

Salary expense 1,200Utilities expense 400

Dividends 2,100

61,800 61,800


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1 50,000 11 2,100

50,000 2,100

4 7,000 6 1,100

5 3,000 1,100

10,000

6 1,200

1,200

6 400

400

Expenses

Rent expense

Salaries expense

Utilities expense

Service Revenues

Revenues

STOCKHOLDERS' EQUITY

Common Stock Dividends


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4 Usea trial balance

a list of all the accounts w ith thei

a trial balance

summarizes all the account balan

financial statements


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a trial balance

shows whether the total of the de

the total of the credits


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Chart of Accoun ts

a list of all the accounts

The "normal balance" of an account

falls on the side of the account - de

increases or recorded


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page 87

balances

page 87

es for the


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page 87

its equal


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page 90

page 91

bit or credit - where


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4 Analyzetransactions using "T-ac

because sometimes decisions m

without the benefit of a compl

system

T - accounts are used to analy

Cash 100

Accounts rec 800


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Sales Revenue

1600

300

900

300 2500

2200

9000

Receipts

25000 Payments

14000 25000

11000

Acct Pay

Cash


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Supplies 780

Cash

Acct Payable


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ounts"

page 92

st be made

te accounting

e transactions


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900


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380

400

2301 chapt 02 trans analysis

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