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					AGRICULUTURAL TECHNICAL INSTITUTE
     BUS TEC T101 ACCOUNTING




           Chapter 2
           Recording
      Business Transactions
CH 1: ACCT & THE BUS ENVIRONMENT
                REVIEW
          The Account Equation
          (A=L+OE) is the basis
            for all accounting
  BUSINESS     FINANCIAL       FINANCIAL
TRANSCTIONS   ACCOUNTING      STATEMENTS
CH 1: ACCT & THE BUS ENVIRONMENT
              REVIEW
1. Terms      2. Procedures
    a. Assets     a. Transactions
   b. Liabilities    b. Prepare Financial St
   c. Equity            1. Income St
   d. Revenue           2. Equity St.
   e. Expenses           3. Balance Sh.
   f. Acct Principles 4. Cash Flow St
   ACCOUNTING CONCEPTS
Business Transactions   Chapter One
   Journal Entries      Chapter Two
   Posting to Ledgers
   Trial Balance




Financial Statements
CH 2: RECORDING BUS TRANSACTIONS

        LEARNING OBJECTIVES
   AFTER COMPLETING THIS CHAPTER, THE STUDENT
               SHOULD BE ABLE TO:


1. Define & Use Key Accounting Terms
2. Apply the Rules of Debits and Credits
3. Record Transactions in the Journal
4. Post from the Journal to the Ledger
5. Prepare & Use a Trial Balance
46
OBJ    1 Define & Use Key Accounting Terms

   Accounts                                                 Ledger
              Individual asset accounts
                                                             All individual
  Cash                                                         accounts
                                                              combined
                                                               make up
                                                              the ledger.
                 Accounts                                       Ledger
                  Payable
                            Individual liability accounts


Gay Gillen,
 Capital

              Individual owner’s equity accounts
55
OBJ   1 Define & Use Key Accounting Terms
      Chart of Accounts in the Ledger
 This is a listing of all accounts & related
  account numbers used by a business.
 Each account should have its own number.
 The numbering system should allow flexibility
  for changing business needs.

    Typically for a small business
     100’s = Assets Accts       400’s = Revenue
     200’s = Liability Accts    500’s = Expenses
     300’s = Equity Accts
45
OBJ    1 Define & Use Key Accounting Terms

    Assets
   What are some asset accounts?
–   Cash (Checking Acct)
–   Accts Receivable (Unwritten Promises to Pay)
–   Notes Receivable (Written Promises to Pay)
–   Prepaid Expenses (Expense Paid in Advance)
–   Equipment
–   Building
–   Land

In Order by Liquidity: Time to Convert to Cash
45
OBJ   1 Define & Use Key Accounting Terms
    Assets      Liabilities
   What are some liability accounts?
–   Accounts Payable (Things bought on short
    term credit)
–   Notes Payable (Loans longer than 1 yr)
–   Accrued Liabilities (for expenses incurred but
    not paid)
–   Long-term Liabilities (bonds)
46
OBJ    1 Define & Use Key Accounting Terms
      Assets     Liabilities     Owner’s Equity
   What are some owner’s equity accounts?
  – Capital or owner’s interest in the business
  – Withdrawals by the owner
  – Revenues from business activities
  – Expenses related to business activities
In a corporation, the owner’s equity account is
          called Stockholders’ Equity.
  Contributed Capital          Retained Earnings
47
OBJ   1 Define & Use Key Accounting Terms

       Double-Entry Accounting
   Double entry bookkeeping means to
    record the multiple effects of each
    business transaction.
   Assets = Liabilities + Owner’s Equity
   Assets are on the left (debit) side.
   Liabilities and Equity are on the right
    (credit) side.
47
OBJ   1 Define & Use Key Accounting Terms

             The T-Account
               Account Title
             Debit      Credit


LEFT SIDE                     RIGHT SIDE
   Debits are always on the left,
     and Credits on the right
   But their effects differs based on
       what account is changed
48           Apply the rules of debit & credit.
OBJ     2
        Rules of Debit and Credit
      Assets               Liabilities     +      Owner’s
                     =                             Equity
Debit       Credit       Debit    Credit       Debit   Credit
  +            -           -        +            -       +



                     $Debits = $Credits
 NB                                 NB                  NB
            Normal Account Balances
 The side where we expect increases (+) to be
     recorded is the normal balance side.
48        Apply the rules of debit & credit.
OBJ   2
      Rules of Debit and Credit

  A = L + OE
 D +                           C+
EXPENSES: D+              REVENUE: C+
WITHDRAWALS: D+           CAPITAL: C+
48        Apply the rules of debit & credit.
OBJ   2
      The Double-Entry System
  Each transaction is recorded with at least:

      One debit                   One credit

      Total debits must equal total credits.

1. For any one transaction
2. For any account in Ledger
3. For the Ledger as a whole      DEBITS   CREDITS

4. For the Balance Sheet
48          Apply the rules of debit & credit.
OBJ    1
  Reviews Rules of Debits & Credits
 ACCOUNTING           EFFECT OF    EFFECT OF
 COMPONENT              DEBIT       CREDIT

      1. Assets

  2. Liabilities

      3. Owner’s
         Equity

       4. Revenue

       5. Expenses
50
OBJ   3 Record Transactions in Journal.

                Journals
   What is a journal?
   It is a list in CHRONOLOGICAL order of
    all the transactions for a business.
  1 Identify transaction from source
    documents (sales slip, invoice, etc.)
  2 Specify accounts affected.
  3 Apply debit/credit rules.
  4 Record transaction with description.
50            Record Transactions in Journal.
OBJ     3
                Journal Entry Rules
       What does a journal entry include?
       –date of the transaction
       –title of the account debited (First)
       –title of the account credited (Second)
       -amount of the debit and credit
        –description of the transaction

        -dollar signs are omitted
Date        Accounts & Explanation   Debit    Credit
Aug 2         Supplies                  500
                Acct Payable                     500
              Bought Supplies on Acct
      3   Record Transactions in Journal.
OBJ

  1. When should a transaction be recorded?
   a. Must effect the entity’s financial position
     b. Must be reliable
2. Where should the transaction be recorded?
       -- In the Journal
3. What to record for each transaction?
    -- Incr / Decr for all accounts affected
  4. How should the transaction be recorded?
  -- Follow the rules of debits and credits
52           Record Transactions in Journal.
OBJ
         3
 1. SHAY GILLIAN FORMS A BUSINESS BY TRANSFERRING $30,000
 FROM A SAVING ACCT TO A BUSINESS CHECKING ACCT ON APR 2
             ASSETS                  =   LIAB        CAPITAL
         ACCT
CK       REC SUPP   EQP   BLD   LD   = ACTS   NOTES INV REC/EXP
+30000                                            +30000
                    General Journal             Page 1
 Date        Accounts & Explanation Debit Credit
April 2      Cash                       30,000
               Shay Gillen, Capital            30,000
                Received initial investment from owner
 52          Record Transactions in Journal.
 OBJ
         3
 2. PAID $20,000 CASH ON 4/3 FOR LD TO BUILD AN OFFICE.
           ASSETS                    LIAB     CAPITAL
         ACCT
 CK      REC SUPP   EQP   BLD   LD = ACTS NOTES     INV REC/EXP
+30000                                            +30000
-20000                      +20000

                    General Journal                   Page 1
  Date       Accounts & Explanation        Debit      Credit
 April 2     Cash                          30,000
               Shay Gillen, Capital                   30,000
 April 3     Land                      20,000
               Cash                           20,000
                Buy land for office building
 53        Record Transactions in G Journal
 OBJ
     3

  3. BOUGHT OFFICE SUPPLIES FOR $500 ON ACCOUNT ON APR 6
            ASSETS                          LIAB      CAPITAL
         ACCT
 CK      REC SUPP   EQP   BLD   LD = ACTS NOTES      INV REC/EXP
+30000                                             +30000
-20000                      +20000
             +500                    +500
                     General Journal            Page 1
 Date       Accounts & Explanation Debit Credit
April 2     Cash                       30,000
              Shay Gillen, Capital             30,00
April 3     Land                       20,000    0
              Cash                            20,000
April 6     Supplies                      50
              Accounts Payable             0     500
            Bought supplies on account
51
OBJ   4       Posting from Gen Journal
                       Journal
      It is a list in chronological order of all the
               transactions for a business.
                        Ledger
 It is a digest of all accounts utilized by an entity
    during an accounting period. It is a listing of
    transactions for an entity .
 Loose leaf    Computer        Bound
   pages                       books           Cards
                printout
                       Posting
  is the process of transferring of data from the
      journal to appropriate ledger accounts.
51
OBJ   4    Posting from Gen Journal

                    Posting
   is the process of transferring of data from the
       journal to appropriate ledger accounts.

      First we’ll look at: Posting to T-accounts

Then we’ll look at: Posting to a 4 column ledger
46
OBJ      4 Post from Journal to T Accts
               General Journal          Page 1
 Date Accounts & Explanation Ref Debit Credit
April 2 Cash                     30,000
         Shay Gillen, Capital           30,000
 1
      Assets             Liabilities Capital
     Cash      Equip    Acct Payable Gillian
30,000                                   30,000
                                    Revenue
 Acct Rec      Bldg
                        Notes Payable
                                    Expenses
 Supplies      Land
47
OBJ   4     Post from Journal to T Accts
               General Journal          Page 1
 Date Accounts & Explanation Ref Debit Credit
April 3 Land                     20,000
         Cash                           20,000
 2
            Assets            Liabilities Capital
     Cash            Equip   Acct Payable Gillian
30,000 20,000                                 30,000
                                         Revenue
 Acct Rec            Bldg
                             Notes Payable
                                         Expenses
 Supplies            Land
                20,000
47
OBJ    4    Post from Journal to T Accts
               General Journal         Page 1
 Date Accounts & Explanation Ref Debit Credit
April 6 Supplies                  500
          Acct Payable                   500
 3
            Assets            Liabilities Capital
     Cash            Equip   Acct Payable Gillian
30,000 20,000                      500
                                              30,000
                                         Revenue
 Acct Rec            Bldg
                             Notes Payable
                                         Expenses
 Supplies            Land
 500            20,000
47
OBJ   4   Post from Journal to T Accts
                General Journal        Page 1
 Date Accounts & Explanation Ref Debit Credit
April 7 Acct Payable              300
          Cash                           300

April 8   Gillian, Withdraws      2,000
              Cash                        2,000
48
OBJ      4     Post from Journal to T Accts
                      General Journal         Page 1
 Date        Accounts & Explanation Ref Debit Credit

              Assets              Liabilities       Capital
     Cash             Equip     Acct Payable         Gillian
30,000       20,000                                      30,000
                                  300     500
               300                                       30,000
             2,000                        Bal 200
Bal 7,700              Bldg     Notes Payable Revenue
 Acct Rec

  Supplies             Land      Withdraw           Expenses
  500             20,000          2,000
Bal 500        Bal 20,000     Bal 2,000
51
OBJ   4    Posting from Gen Journal

                    Posting
   is the process of transferring of data from the
       journal to appropriate ledger accounts.


Now: Let’s look at the 4 column account format
      4 Post Fr Journal to 4 Col Ledger
OBJ

The Four-Column Account Format
  Account: Cash                          Account No. 101
                                               Balance
 Date      Item Ref.   Debit    Credit     Debit    Credit

 April 2         GJ    30,000              30,000

Why this format instead of T accounts?
1. Has room for reference information
2. Has a running balance, so information is
easier to retrieve
53
OBJ   4 Post Fr Journal to 4 Col Ledger
               General Journal          Page 1
 Date Accounts & Explanation Ref Debit Credit
April 2 Cash                     30,000
         Shay Gillen, Capital           30,000
54
        4 Post Fr Journal to 4 Col Ledger
OBJ
                  Posting Steps
     1. Copy (post) transaction date from journal to
     the appropriate ledger account
53
OBJ      4 Post Fr Journal to 4 Col Ledger
               General Journal          Page 1
 Date Accounts & Explanation Ref Debit Credit
April 2 Cash                     30,000
         Shay Gillen, Capital           30,000

     Account: Cash                      Account No. 101
                                              Balance
  Date     Item Ref.   Debit   Credit     Debit   Credit
 April 2

     1
 Enter the date
 from the journal
54
        4 Post Fr Journal to 4 Col Ledger
OBJ
                  Posting Steps
     1. Copy (post) transaction date from journal to
     the appropriate ledger account
     2. Copy (post) journal name & page from
     journal to the appropriate ledger account
53
OBJ      4 Post Fr Journal to 4 Col Ledger
               General Journal          Page 1
 Date Accounts & Explanation Ref Debit Credit
April 2 Cash                     30,000
         Shay Gillen, Capital           30,000

     Account: Cash                      Account No. 101
                                              Balance
  Date     Item Ref.   Debit   Credit     Debit   Credit
 April 2        GJ-1

     1          2
Enter         Enter
 the         journal
date         pg&no
54
        4 Post Fr Journal to 4 Col Ledger
OBJ
                   Posting Steps
     1. Copy (post) transaction date from journal to
     the appropriate ledger account
     2. Copy (post) journal name & page from
     journal to the appropriate ledger account
     3. Copy (post) debit from journal to the
     appropriate ledger account
53
OBJ      4 Post Fr Journal to 4 Col Ledger
               General Journal          Page 1
 Date Accounts & Explanation Ref Debit Credit
April 2 Cash                     30,000
         Shay Gillen, Capital           30,000

     Account: Cash                       Account No. 101
                                               Balance
  Date     Item Ref.   Debit    Credit     Debit   Credit
 April 2        GJ-1   30,000

     1          2       3        3
Enter         Enter       Enter
 the         journal     debit or
date         pg&no        credit
54
        4 Post Fr Journal to 4 Col Ledger
OBJ
                   Posting Steps
     1. Copy (post) transaction date from journal to
     the appropriate ledger account
     2. Copy (post) journal name & page from
     journal to the appropriate ledger account
     3. Copy (post) debit from journal to the
     appropriate ledger account
     4. Calculate running balance
53
OBJ      4 Post Fr Journal to 4 Col Ledger
               General Journal          Page 1
 Date Accounts & Explanation Ref Debit Credit
April 2 Cash                     30,000
         Shay Gillen, Capital           30,000

     Account: Cash                       Account No. 101
                                                Balance
  Date     Item Ref.   Debit    Credit     Debit    Credit
 April 2        GJ-1   30,000              30,000

     1          2       3        3          4
Enter         Enter       Enter            Cal
 the         journal     debit or          Run
date         pg&no        credit           Bal
54
        4 Post Fr Journal to 4 Col Ledger
OBJ
                   Posting Steps
     1. Copy (post) transaction date from journal to
     the appropriate ledger account
     2. Copy (post) journal name & page from
     journal to the appropriate ledger account
     3. Copy (post) debit from journal to the
     appropriate ledger account
     4. Calculate running balance
     5. Copy (post) ledger account number back to
     the Post Ref col in the journal
53
OBJ      4 Post Fr Journal to 4 Col Ledger
               General Journal           Page 1
 Date Accounts & Explanation Ref Debit Credit
April 2 Cash                  101 30,000
         Shay Gillen, Capital            30,000

     Account: Cash                       Account No. 101
                                                Balance
  Date     Item Ref.   Debit    Credit     Debit     Credit
 April 2        GJ-1   30,000              30,000

     1          2       3        3          4          5
Enter         Enter       Enter          Cal       Put acct no
 the         journal     debit or        Run       in Post Ref
date         pg&no        credit         Bal           col
54
        4 Post Fr Journal to 4 Col Ledger
OBJ
                   Posting Steps
     1. Copy (post) transaction date from journal to
     the appropriate ledger account
     2. Copy (post) journal name & page from
     journal to the appropriate ledger account
     3. Copy (post) debit from journal to the
     appropriate ledger account
     4. Calculate running balance
     5. Copy (post) ledger account number back to
     the Post Ref col in the journal
     6. Repeat steps 1-4 for the credit entry
53
OBJ      4 Post Fr Journal to 4 Col Ledger
               General Journal           Page 1
 Date Accounts & Explanation Ref Debit Credit
April 2 Cash                  301 30,000
         Shay Gillen, Capital            30,000

     Account: Shay Gillen, Capital       Account No. 301
                                              Balance
  Date     Item Ref.   Debit   Credit    Debit     Credit
 April 2        GJ-1           30,000              30,000

     1          2       3       3         4          5
Enter         Enter       Enter         Cal      Put acct no
 the         journal     debit or       Run      in Post Ref
date         pg&no        credit        Bal          col
47
OBJ   4   Post from Journal to T Accts
               General Journal          Page 1
 Date Accounts & Explanation Ref Debit Credit
April 3 Land                     20,000
             Cash                         20,000
April 6   Supplies                 500
           Acct Payable                   500
April 7   Acct Payable            300
            Cash                          300

April 8 Gillen, Withdrawals       2,000
            Cash                          2,000
53
OBJ     4 Post Fr Journal to 4 Col Ledger
      Account: Land                             Account No. 106
                                                         Balance
      Date      Item Ref.   Debit      Credit      Debit     Credit
     April 3         GJ-1   20,000                20,000


 Account: Cash                                Account No. 101
                                                    Balance
 Date          Item Ref. Debit       Credit      Debit     Credit
April 2             GJ-1 30,000                 30,000

April 3            GJ-1             20,000       10,00
                                                   0
53
OBJ     4 Post Fr Journal to 4 Col Ledger
      Account: Supplies                          Account No. 103
                                                         Balance
      Date      Item Ref.     Debit     Credit     Debit     Credit
     April 6         GJ-1     500                  500


 Account: Accounts Payable                     Account No. 201


                                                     Balance
 Date          Item Ref.    Debit     Credit     Debit     Credit
April 6             GJ-1               500                   500
53
OBJ   4 Post Fr Journal to 4 Col Ledger
 Account: Accounts Payable                 Account No. 201
                                                    Balance
  Date      Item Ref.   Debit     Credit      Debit     Credit
 April 6         GJ-1              500                   500

 April 7         GJ-1   300                              200

 Account: Cash                           Account No. 101
                                               Balance
 Date      Item Ref. Debit      Credit      Debit     Credit
April 2         GJ-1 30,000                30,000

April 3        GJ-1             20,000     10,00
                                             0
April 7        GJ-1              300       9,700
53
OBJ   4 Post Fr Journal to 4 Col Ledger
Account: Shay Gillen, Withdrawals Account No. 302
                                                  Balance
  Date     Item Ref.   Debit    Credit     Debit      Credit
 April 8        GJ-1   2,000               2,000

 Account: Cash                         Account No. 101
                                            Balance
Date    Item Ref.   Debit Credit         Debit     Credit
April 2      GJ-1   30,000               30,000
April 3      GJ-1          20,000        10,00
                                           0
April 7      GJ-1              300       9,700
April 8      GJ-1              2,000     7,700
54
OBJ      5   Prepare & use a trial balance.

                   Trial Balance
      What is a trial balance?
      It is an internal document.
      It is a listing of all the accounts with their
       related balances.
      Before computers, it provided a check on
       accuracy by showing whether total debits
       equal total credits.
55
      5 Prepare & use a trial balance.
OBJ
                     Gillen Travel
                    Trial Balance
                  As of _____ 20xx
      Account              Debit   Credit
      Cash                 7, 700
      Acct Rec                  0
      Supplies               500
      Equip                     0
      Buildings                 0
      Land                20,000
      Acct Payable                     200
      Notes Payable                      0
      Gillen, Capital               30,000
      Gillen, Withdraw     2,000
      Revenue                           0
                               0
      Expense
                          30,200    30,200
65
OBJ      5   Prepare & use a trial balance.


      Locating Trial Balance Errors
      What if it doesn’t balance ?
      Is the addition correct?
      Are all accounts listed?
      Are the balances listed correctly?



                                 DEBITS     CREDITS
65
OBJ      5   Prepare & use a trial balance.

      Locating Trial Balance Errors

      Divide the difference by two.
      Is there a debit/credit balance for this
       amount posted in the wrong column?
      Check journal postings.
      Review accounts for reasonableness.
      Computerized accounting programs
       usually prohibit out-of-balance entries.
54
OBJ
           1 Post Fr Journal to 4 Col Ledger
 Date              E2-7   Pg 76   PR    Db        Cr
 5/2        Cash                       20,000
              Edwards, Capital                  20,000


     5/5    Cash                       25,000
              Notes Payable                     25,000


     5/9   Supplies                    200
             Accounts Payable                     200


 5/11       Accounts Receivable        2,600
               Service Revenue                   2,600
54
       1 Post Fr Journal to 4 Col Ledger
OBJ
  Account: Cash                          Account No. 110
     Date   Item Ref.   Debit   Credit      Debit   Credit



     Account: Acct Rec                   Account No. 120
     Date   Item Ref.   Debit   Credit     Debit    Credit




 Account: Supplies                       Account No. 130
     Date   Item Ref.   Debit   Credit      Debit   Credit
54
        1 Post Fr Journal to 4 Col Ledger
OBJ
 Account: Acct Payable                     Account No. 210
     Date   Item Ref.    Debit    Credit      Debit    Credit


     Account: Notes Payable                Account No. 230
     Date   Item Ref.   Debit    Credit      Debit    Credit


     Account: Edwards, Capital             Account No. 310
     Date   Item Ref.   Debit    Credit      Debit    Credit


     Account: Service Rev                  Account No. 410
     Date   Item Ref.   Debit    Credit      Debit    Credit
54
       2    Preparing A Trial Balance
OBJ
  Account: Cash                          Account No. 110
     Date   Item Ref. Debit     Credit      Debit   Credit
     5/2         GJ1 20,000                20,000
     5/5         GJ1 25,000                45,000
     5/14        GJ1            3,200      41,800
     5/22        GJ1              300      41,500
     5/25        GJ1              400      41,100
     5/27        GJ1 1,400                 42,500
     Account: Acct Rec                   Account No. 120
 Date       Item Ref.   Debit   Credit     Debit    Credit
 5/11            GJ1    2,600              2,600
 5/11            GJ1            1,400       1,200
 Account: Supplies                       Account No. 130
     Date   Item Ref.   Debit   Credit      Debit   Credit
     5/9         GJ1     200                 200
54
       2    Preparing A Trial Balance
OBJ
 Account: Acct Payable                    Account No. 210
     Date   Item Ref.   Debit   Credit      Debit   Credit
      5/9        GJ1             200                  200
     5/22        GJ1     300                  100
     5/9         GJ1              100                  0


     Account: Notes Payable               Account No. 230
     Date   Item Ref. Debit     Credit      Debit   Credit
      5/5         GJ1            25,000             25,000

     Account: Edwards, Capital            Account No. 310
     Date   Item Ref.   Debit   Credit      Debit   Credit
     5/2         GJ1            20,000              20,000
54
       2       Preparing A Trial Balance
OBJ
 Account: Service Rev                     Account No. 410
 Date      Item Ref.   Debit    Credit     Debit    Credit
5/11            GJ1             2,600                2,600

 Account: Rent Expense                    Account No. 510
 Date      Item Ref.   Debit    Credit     Debit    Credit
5/14            GJ1    3,200
                                           3,200
 Account: Adv Expense                     Account No. 520
 Date      Item Ref.   Debit    Credit     Debit    Credit
5/11            GJ1    400                  400
     Account: Util Expense                Account No. 530
  Date     Item Ref.    Debit    Credit     Debit    Credit
 5/11           GJ1      100                100
54
OBJ
      2       Preparing A Trial Balance
               E2- 7 #4      Pg 76
#1 Name:
#2 Statement:
 #3 Date (Pt of Time):          Account   Db   Cr
#4 List Assets Accts & Bal:


#5 List Liab Accts& Bal:

#6 List Capital Accts & Bal:
#7 List Revenue Accts & Bal:
#8 List Expense Accts & Bal:



#9 Total Debits & Credits:
CH 2: RECORDING BUS TRANSACTIONS

              SUMMARY
1. New Terms      2. New Procedures
    a. T Accounts     a. Journalizing
   b. Ledger             b. Posting
   c. Journal            c. Preparing Trial
   d. Debits & Credits   Balance
   e. Normal Balance
   f. Trial Balance
17                  Prepare And Use
                  Financial Statements.
                 Name of Business
                 Income Statement
           For Period Ending xx/xx/20xx
 Revenue:
   Fees earned                              $8,500
 Expenses:
   Salary expense                  1,200
   Utilities & telephone expense     400
   Equipment rental expense          400
   Office rent expense              1,100
   Total Expenses                           $3,100
 Net income (Net Loss)                         $5,400
20                 Prepare And Use
                 Financial Statements.
                Name of Business
           Statement of Owner’s Equity
          For Period Ending xx/xx/20xx
Beginning Capital                        $       0
Add: Contribution of capital              30,000
       Net income                         $5,400
                                             35,400
Less: Cash distributions (Withdraws)         (2,100)
Ending Capital                           $33,300
20                    Prepare And Use
                    Financial Statements.
                    Name of Business
                     Balance Sheet
                    As of xx/xx/20xx

           Assets                         Liabilities
Cash                $ 20,000   Accounts payable         $   200
Accounts receivable    2,000   Notes payable                 $0
Supplies                 500   S. Gillen, capital        33,300
Land                  11,000
                               Total liabilities and
Total assets        $ 33,500   owner’s equity           $33,500
20                     Prepare And Use
                     Financial Statements.
                        Name of Business
                    Statement Of Cash Flows
                 For Period Ending xx/xx/20xx
Cash flows from operating activities:
  Cash in: receipts from services rendered       $6,500
  Cash out: expenses                                  (3,400)
  Net cash flows from Operating activities       $3,100
Cash flows from investing activities
  Cash in: Sale of land                          $9,000
   Cash Out: Purchase of land                    ($20,000)
  Net cash flows from Investing activities ($11,000)
Cash Flows from financing Activities:
   Cash in: Owner’s Investment                   $30,000
   Cash Out: Owner’s Withdraw                    ($2,100)
   Net cash flows from Financing activities     $27,900
NET INCREASE IN CASH                                 $20,000
BEGINING CASH                                          $0
ENDING CASH                                          $20,000
  Next Topic




 CHAPTER 3
THE ADJUSTING
  PROCESS

				
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