I want 20 journal entries , ledger accounts , trail balance.
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Lesson 2: Journal Entries
(Textbook Libby et al. Chapters 3)
Objectives:
When you have successfully completed this lesson, you will be able to:
• explain the proper use of journal entries and ledgers
• explain the rules of debit and credit
• record accounting transactions
• post from the journal to the ledger
• prepare a trial balance
Reading Assignment
Please read chapter 3 of your textbook. Carefully review terminology, double-entry recording, recording of transactions, posting from journal to ledger, revenue and expenses, and trial balance preparation.
Recommended Problem Assignment
Please complete Chapter 3 MC questions plus Exercises 3-1, 3-2, 3-3, 3-4, 3-6, 3-8, and 3-18
Discussion
Formalizing Accounting Transactions
Lesson 1 introduced the concept of an accounting transaction. We defined an accounting transaction as a financial exchange between two independent parties that is recorded using the accounting process. Many of the concepts from Lesson 1 will be repeated in Lesson 2, but will be expanded upon.
In Lesson 1, when LIMO Co. purchased a minivan, the transaction decreased Cash and increased another asset called Equipment. The transaction appeared as follows:
Debit
Credit
Equipment
$30,000
Cash
$30,000
This method of recording is called a journal entry. A journal entry has specific parts and meaning. Note the first line is read as Debit Equipment $30,000. The second line (which is intentionally indented) is read as Credit Cash $30,000. Recall that debit means we enter the number on the left side of the account and credit means we enter the number on the right side, nothing more. Don’t presume that one is positive and the other negative; the accounting process does not work that way.
Journal entries are recorded in a journal. (Computer programs have now replaced the physical, hardcover books; however, sometimes it is easier to visualize pages of a book rather than a hard drive with electrons floating on a disk.) A journal is a chronological listing of all transactions conducted by a business. It is similar in form to a checkbook register where the date and number of every check and the name of the person or business to whom the checks were written is entered. Each journal entry has a date, a name, an amount, and a brief explanation of what happened. The transactions are listed in sequence by date so that businesses can continuously update their account balances.
Here is an example of a formal journal entry:
Debit
Credit
Date
Equipment
$30,000
Cash
$30,000
To record purchase of minivan on XX/XX/200X
Note the addition of a date and explanation, this information is important so that the accountant can always go back and review the event that occurred to validate the accuracy of the entry.
In a business, there would also be a reference number to take us to the invoice showing the detail of the purchase.
Accounts are where similar transactions are summarized. To illustrate, the account Cash keeps track of all the increases and decreases to the Cash balance over a period of time. When cash is received, the account balance goes up; when cash is spent, the balance declines. In Lesson 1 the T account was introduced to track information for each account. For example, the first three transactions in Lesson 1 were shown in T account form as follows:
(Textbook Libby et al. Chapters 3)
Objectives:
When you have successfully completed this lesson, you will be able to:
• explain the proper use of journal entries and ledgers
• explain the rules of debit and credit
• record accounting transactions
• post from the journal to the ledger
• prepare a trial balance
Reading Assignment
Please read chapter 3 of your textbook. Carefully review terminology, double-entry recording, recording of transactions, posting from journal to ledger, revenue and expenses, and trial balance preparation.
Recommended Problem Assignment
Please complete Chapter 3 MC questions plus Exercises 3-1, 3-2, 3-3, 3-4, 3-6, 3-8, and 3-18
Discussion
Formalizing Accounting Transactions
Lesson 1 introduced the concept of an accounting transaction. We defined an accounting transaction as a financial exchange between two independent parties that is recorded using the accounting process. Many of the concepts from Lesson 1 will be repeated in Lesson 2, but will be expanded upon.
In Lesson 1, when LIMO Co. purchased a minivan, the transaction decreased Cash and increased another asset called Equipment. The transaction appeared as follows:
Debit
Credit
Equipment
$30,000
Cash
$30,000
This method of recording is called a journal entry. A journal entry has specific parts and meaning. Note the first line is read as Debit Equipment $30,000. The second line (which is intentionally indented) is read as Credit Cash $30,000. Recall that debit means we enter the number on the left side of the account and credit means we enter the number on the right side, nothing more. Don’t presume that one is positive and the other negative; the accounting process does not work that way.
Journal entries are recorded in a journal. (Computer programs have now replaced the physical, hardcover books; however, sometimes it is easier to visualize pages of a book rather than a hard drive with electrons floating on a disk.) A journal is a chronological listing of all transactions conducted by a business. It is similar in form to a checkbook register where the date and number of every check and the name of the person or business to whom the checks were written is entered. Each journal entry has a date, a name, an amount, and a brief explanation of what happened. The transactions are listed in sequence by date so that businesses can continuously update their account balances.
Here is an example of a formal journal entry:
Debit
Credit
Date
Equipment
$30,000
Cash
$30,000
To record purchase of minivan on XX/XX/200X
Note the addition of a date and explanation, this information is important so that the accountant can always go back and review the event that occurred to validate the accuracy of the entry.
In a business, there would also be a reference number to take us to the invoice showing the detail of the purchase.
Accounts are where similar transactions are summarized. To illustrate, the account Cash keeps track of all the increases and decreases to the Cash balance over a period of time. When cash is received, the account balance goes up; when cash is spent, the balance declines. In Lesson 1 the T account was introduced to track information for each account. For example, the first three transactions in Lesson 1 were shown in T account form as follows:
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