1 book-keeping dr[1]. & cr
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Book Keeping
Book-Keeping For SSNN Ltd.
Amit Shrivastava
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Book-keeping : -is the recording of all financial transactions undertaken by
an individual or organization -The organization may be a business, a charitable
organization ,utility service sector or even a local sports club.
-Bookkeeping is "keeping records of what is bought, sold,
owed, and owned; what money comes in, what goes out, and what is left."
-A financial transaction is any event that involves money. -Individual and family book-keeping involves keeping track
of income and expenses in a cash account record, checking account register, or savings account passbook
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-Two common book-keeping methods used by businesses and other organizations are the single-entry book-keeping system and the double-entry book-keeping system.
-Single-entry systems are used in the interest of simplicity. They are usually less expensive to maintain than double-entry systems because they do not require the services of a trained person.
-Single-entry systems are usually inadequate except where operations are especially simple and the volume of activity.
-Double-entry bookkeeping requires posting (recording) each transaction twice, using debits and credits.
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Double-Entry AccountingDouble-Entry AccountingDouble-Entry AccountingDouble-Entry Accounting
“ Double-entry accounting is based on a
simple concept: each party in a business
transaction will receive something and give
something in return. In bookkeeping terms,
what is received is a debit or X and what is
given is a credit or Y. The T account is a
representation of a scale or balance.”
Scale or Balance
ReceiveDEBIT
GiveCREDIT
T account
Left SideReceiveDEBIT
Right SideGive
CREDIT
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SSNN Ltd.SSNN Ltd.SSNN Ltd.SSNN Ltd.
“ On November 1, 2005, Arun started a project
called SSNN Ltd. . Arun plan to use his
knowledge of microcomputers and offer
computer consulting services for a fee. The
following double-entry transactions show how
amounts received (debits or X) always equal
amounts given (credits or Y).”
Arun is Owner
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Business Transactions Business Transactions
General Journal
receiveDebit
giveCredit
SSNN ltd.(investee)
X (investor)
giveCredit
Entry A.
Date Description Debit Credit
11/1
Arun deposits $ 25,000 in a bank account for SSNN ltd. in exchange for Shares.
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Arun deposits $25,000 in a bank account for SSNNL in exchange for Share Capital.
Business TransactionsBusiness Transactions
General Journal
receiveDebit
giveCredit
SSNNL(investee)
Cash
X (investor)
giveCredit
Entry A.
Date Description Debit Credit
11/1 Cash 25,000
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Business TransactionsBusiness Transactions
General Journal
Date Description Debit Credit
11/1 Cash 25,000 Shares 25,000
receiveDebit
giveCredit
SSNNL(investee)
Cash CapitalStock
X (investor)
giveCredit
Entry A.
Arun started project SSNNL from cash of Rs. 25,000
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SSNNL buys land for $20,000.
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(buyer)
Land Owner (seller)
giveCredit
Entry B.
General Journal
Date Description Debit Credit
11/5
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SSNNL buys land for $20,000.
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(buyer)
Land
Land Owner (seller)
giveCredit
Entry B.
General Journal
Date Description Debit Credit
11/5 Land 20,000
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SSNNL buys land for $20,000.
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL (buyer)
Land Cash
Land Owner (seller)
giveCredit
Entry B.
General Journal
Date Description Debit Credit
11/5 Land 20,000 Cash 20,000
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SSNNL buys supply / goods for $1,350, agreeing to pay in the near future.**
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(buyer)
Supplier (seller)
giveCredit
Entry C.
General Journal
Date Description Debit Credit
11/10
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SSNNL buys supplies for $1,350, agreeing to pay in the near future.**
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(buyer)
Supplies
Supplier (seller)
giveCredit
Entry C.
General Journal
Date Description Debit Credit
11/10 Supplies/goods 1,350
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SSNNL buys supplies for $1,350, agreeing to pay in the near future.**
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(buyer)
Supplies
Supplier (seller)
giveCredit
Entry C.
A promiseto pay later
General Journal
Date Description Debit Credit
11/10 Supplies 1,350 Accounts Payable 1,350
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SSNNL earns fees of $7,500, receiving cash.
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(seller)
Customer (buyer)
giveCredit
Entry D.
General Journal
Date Description Debit Credit
11/18
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SSNNL earns fees of $7,500, receiving cash.
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(seller)
Cash
Customer (buyer)
giveCredit
Entry D.
General Journal
Date Description Debit Credit
11/18 Cash 7,500
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SSNNL earns fees of $7,500, receiving cash.
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(seller)
Cash
Customer (buyer)
giveCredit
Entry D.
Services
General Journal
Date Description Debit Credit
11/18 Cash 7,500 Fees Earned 7,500
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Date Description Debit Credit
SSNNL paid: wages, $2,125; rent, $800; utilities, $450; and miscellaneous, $275.
Business TransactionsBusiness Transactions
General Journal
receiveDebit
giveCredit
SSNNL(buyer)
Various suppliers
giveCredit
Entry E.
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Date Description Debit Credit
11/18 Wages Expense 2,125Rent Expense 800Utilities Expense 450Misc. Expense 275
SSNNL paid: wages, $2,125; rent, $800; utilities, $450; and miscellaneous, $275.
Business TransactionsBusiness Transactions
General Journal
receiveDebit
giveCredit
SSNNL(buyer)
Services,benefits
Various suppliers
giveCredit
Entry E.
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Date Description Debit Credit
11/18 Wages Expense 2,125Rent Expense 800Utilities Expense 450Misc. Expense 275 Cash 3,650
SSNNL paid: wages, $2,125; rent, $800; utilities, $450; and miscellaneous, $275.
Business TransactionsBusiness Transactions
General Journal
receiveDebit
giveCredit
SSNNL(buyer)
Services,benefits
Various suppliers
giveCredit
Entry E.
Cash
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SSNNL pays $950 to creditors on account.
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(payor)
Supplier (payee)
giveCredit
Entry F.
General Journal
Date Description Debit Credit
11/30
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SSNNL pays $950 to creditors on account.
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(payor)
Reduction in obligation
Supplier (payee)
giveCredit
Entry F.
General Journal
Date Description Debit Credit
11/30 Accounts Payable 950
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SSNNL pays $950 to creditors on account.
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(payor)
Reduction in obligation
Supplier (payee)
giveCredit
Entry F.
Cash
General Journal
Date Description Debit Credit
11/30 Accounts Payable 950 Cash 950
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At the end of the month, the cost of supplies/goods on
hand is $550.**
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(user)
Internal Transaction
(no external entity)
giveCredit
Entry G.
General Journal
Date Description Debit Credit
11/30
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At the end of the month, the cost of supplies/goods on hand is $550.**
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(user)
Use of supplies
Internal Transaction
(no external entity)
giveCredit
Entry G.
General Journal
Balance of Supplies account $1,350 less $550 on hand = $800 used
Date Description Debit Credit
11/30 Supplies Expense 800
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At the end of the month, the cost of supplies/goods on hand is $550.**
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(user)
Use of supplies
Internal Transaction
(no external entity)
giveCredit
Entry G.
Supplies
General Journal
Date Description Debit Credit
11/30 Supplies Expense 800 Supplies 800
Balance of Supplies account $1,350 less $550 on hand = $800 used
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SSNNL paid dividends of $2,000.
Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(payer)
X (stockholder)
giveCredit
Entry H.
General Journal
Date Description Debit Credit
11/30
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Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(payer)
Reduction in equity
X (stockholder)
giveCredit
Entry H.
General Journal
Date Description Debit Credit
11/30 Dividends 2,000
SSNNL paid dividends of $2,000.
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Business TransactionsBusiness Transactions
receiveDebit
giveCredit
SSNNL(payer)
Reduction in obligation
X (stockholder)
giveCredit
Entry H.
Cash
General Journal
Date Description Debit Credit
11/30 Dividends 2,000 Cash 2,000
SSNNL paid dividends of $2,000.
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Post. Date Description Ref. Debit Credit
12/1 Prepaid Insurance 2,400 Cash 2,400
General Journal Page 1
Recording and Posting an EntryRecording and Posting an Entry
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Post. Date Description Ref. Debit Credit
12/1 Prepaid Insurance 2,400 Cash 2,400
Post. BalanceDate Item Ref. Debit Credit Debit Credit
12/1
Account: Prepaid Insurance Account No. 15
General Journal
General Ledger
Page 1
Recording and Posting an EntryRecording and Posting an Entry
1
1 Enter the transaction date in the ledger account.
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Post. Date Description Ref. Debit Credit
12/1 Prepaid Insurance 2,400 Cash 2,400
Post. BalanceDate Item Ref. Debit Credit Debit Credit
12/1 1 2,400
Account: Prepaid Insurance Account No. 15
General Journal
General Ledger
Page 1
Recording and Posting an EntryRecording and Posting an Entry
2
2 Enter the debit amount in the ledger debit column.
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Post. Date Description Ref. Debit Credit
12/1 Prepaid Insurance 2,400 Cash 2,400
Post. BalanceDate Item Ref. Debit Credit Debit Credit
12/1 1 2,400 2,400
Account: Prepaid Insurance Account No. 15
General Journal
General Ledger
Page 1
Recording and Posting an EntryRecording and Posting an Entry
3
3 Update the ledger account balance.
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Post. Date Description Ref. Debit Credit
12/1 Prepaid Insurance 2,400 Cash 2,400
Post. BalanceDate Item Ref. Debit Credit Debit Credit
12/1 1
Account: Prepaid Insurance Account No. 15
General Journal
General Ledger
Page 1
Recording and Posting an EntryRecording and Posting an Entry
4
4 Enter the journal page in the ledger account.
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Post. Date Description Ref. Debit Credit
12/1 Prepaid Insurance 15 2,400 Cash 2,400
Post. BalanceDate Item Ref. Debit Credit Debit Credit
12/1 1 2,400 2,400
Account: Prepaid Insurance Account No. 15
General Journal
General Ledger
Page 1
Recording and Posting an EntryRecording and Posting an Entry
5
5 Enter the ledger account number in the journal.
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Recording and Posting an EntryRecording and Posting an Entry
Post. Date Description Ref. Debit Credit
12/1 Prepaid Insurance 15 2,400 Cash 11 2,400
Post. BalanceDate Item Ref. Debit Credit Debit Credit
11/30 Balance 5,90012/1 1 2,400 3,500
Account: Cash Account No. 11
General Journal
General Ledger
Page 1
1 5 2
3
4
All five parts of the credit posting are shown.
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Correcting ErrorsCorrecting Errors
Three Types of ErrorsJournal EntryJournal Entry Ledger PostingLedger Posting Correction ProcedureCorrection Procedure
1. incorrect not posted correct Journal
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Correcting ErrorsCorrecting Errors
Three Types of ErrorsJournal EntryJournal Entry Ledger PostingLedger Posting Correction ProcedureCorrection Procedure
1. incorrect not posted correct Journal
2. correct incorrectly posted correct Ledger
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SSNNLTrial Balance
November 30, 2002
11 Cash 5,90014 Supplies 55017 Land 20,00021 Accounts Payable 40031 Capital Stock 25,00033 Dividends 2,00041 Fees Earned 7,50051 Wages Expense 2,12552 Rent Expense 80054 Utilities Expense 45055 Supplies Expense 80059 Miscellaneous Expense 275
32,900 32,900
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SSNNLTrial Balance
November 30, 2002
11 Cash 5,90014 Supplies 55017 Land 20,00021 Accounts Payable 40031 Share Capital 25,00033 Dividends 2,00041 Fees Earned 7,50051 Wages Expense 2,12552 Rent Expense 80054 Utilities Expense 45055 Supplies Expense 80059 Miscellaneous Expense 275
32,900 32,900
BalanceSheet
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IncomeStatement
SSNNLTrial Balance
November 30, 2002
11 Cash 5,90014 Supplies 55017 Land 20,00021 Accounts Payable 40031 Capital Stock 25,00033 Dividends 2,00041 Fees Earned 7,50051 Wages Expense 2,12552 Rent Expense 80054 Utilities Expense 45055 Supplies Expense 80059 Miscellaneous Expense 275
32,900 32,900
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SSNNLChart of Accounts
Balance Sheet Income Statement1. Assets11 Cash12 Accounts Receivable14 Supplies15 Prepaid Insurance17 Land18 Office Equipment
2. Liabilities21 Accounts Payable23 Unearned Rent
3. Owner’s Equity31 Capital Stock32 Retained Earnings33 Dividends
4. Revenue41 Fees Earned
5. Expenses51 Wages Expense52 Rent Expense54 Utilities Expense55 Supplies Expense59 Miscellaneous
Expense
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