Write journal entries for the following transaction and explain accounting treatments based on equation
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Answer:
and Post to T-Accounts
When we introduced debits and credits, you learned about the usefulness of T-accounts as a graphic representation of any account in the general ledger. But before transactions are posted to the T-accounts, they are first recorded using special forms known as journals.
Journals
Accountants use special forms called journals to keep track of their business transactions. A journal is the first place information is entered into the accounting system. A journal is often referred to as the book of original entry because it is the place the information originally enters into the system. A journal keeps a historical account of all recordable transactions with which the company has engaged. In other words, a journal is similar to a diary for a business. When you enter information into a journal, we say you are journalizing the entry. Journaling the entry is the second step in the accounting cycle. Here is a picture of a journal.
A journal entry shows four columns labeled left to right: Date, Account, Debit, Credit. Under the column headings is a blank line with no entry.
You can see that a journal has columns labeled debit and credit. The debit is on the left side, and the credit is on the right. Let’s look at how we use a journal.
When filling in a journal, there are some rules you need to follow to improve journal entry organization.
Formatting When Recording Journal Entries
Include a date of when the transaction occurred.
The debit account title(s) always come first and on the left.
The credit account title(s) always come after all debit titles are entered, and on the right.
The titles of the credit accounts will be indented below the debit accounts.
You will have at least one debit (possibly more).
You will always have at least one credit (possibly more).
The dollar value of the debits must equal the dollar value of the credits or else the equation will go out of balance.
You will write a short description after each journal entry.
Skip a space after the description before starting the next journal entry.
An example journal entry format is as follows. It is not taken from previous examples but is intended to stand alone.
A journal entry dated April 1, 2018. Debit Cash, 5,000. Credit Common Stock, 5,000. Explanation: “Received cash in exchange for common stock.”
Note that this example has only one debit account and one credit account, which is considered a simple entry. A compound entry is when there is more than one account listed under the debit and/or credit column of a journal entry (as seen in the following).
A journal entry dated April 1, 2018. Debit Cash, 3,000, and Supplies, 2,000. Credit Common Stock, 5,000. Explanation: “Received cash and supplies in exchange for common stock.”
Notice that for this entry, the rules for recording journal entries have been followed. There is a date of April 1, 2018, the debit account titles are listed first with Cash and Supplies, the credit account title of Common Stock is indented after the debit account titles, there are at least one debit and one credit, the debit amounts equal the credit amount, and there is a short description of the transaction.
Explanation:
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Answer:
1/6/2020 purchased goods for 1000