ACC 100 Accounting I Week 2 Discussion 1

  

“Importance of Accounting” Please respond to the following.In your own words, explain the recording process and the accounting equation to someone who has no accounting experience. Give your opinion on the elements or areas that might cause the most confusion or be the most difficult to grasp.
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Accounting I
ACC 100
The Recording Process
Topics




The account
Steps in the recording process
The recording process illustrated
The trial balance
The Account
The account
A record of increases and decreases
in a specific asset, liability, equity,
revenue or expense item during a
period.
T – Account
Account title
Left or debit side
Right or credit side
Debit balance
Credit balance
The Account cont
Assets
Liabilities
Equity
• Resources owned or controlled by a company
that have a future economic benefit
• Cash, Accounts Receivable, Prepaid Expenses,
Office supplies, Equipment, Buildings, Land
• Claims against assets by creditors
• Accounts payable, Notes payable, Unearned
Revenues, Accrued liabilities
• Owners claim on company assets
• Owners Capital, Owners Withdrawals Revenues,
Expenses
The Account cont
Assets
DR
Liabilities
CR
Equity
CR
Temporary Versus Permanent Accounts
Temporary Accounts
Revenue
Expense
Income Summary
Owner’s withdrawals
Permanent Accounts
Assets
Liabilities
Owner’s Capital
PROPERTIES
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Steps in the Recording Process
Analyze each
transaction for its
effect on the
accounts
Enter the
transaction
information in a
journal – total
debits equal total
credits
Transfer the
journal
information to the
appropriate
accounts in the
ledger
Steps in the Recording Process cont
Analyze each transaction
Murphy’s Auto Company
January 1, 2011
Pete’s Plumbing Shop
2011 Chevrolet 2500
Registration, title,
Warranty
Sales tax
Total balance due
Invoice due, n/30
$42,000
3,200
3,150
$48,350
Analyze each
transaction for its
effect on the
accounts
Steps in the Recording Process cont
Enter the
transaction
information in a
journal – total
debits equal total
credits
General Journal
Date
Account Titles and Explanation
1/1/11
Fixed Asset Truck, Chevrolet 2500
Accounts Payable, Murphy’s Auto
Company
Purchased truck with terms net thirty
days.
Ref
Debit
Credit
$48,350
$48,350
The Ledger
Asset
Accounts
Building
Liability
Accounts
Bonds payable
Equipment
Notes Payable
Cash
Accounts
Payable
Transfer the
journal
information to the
appropriate
accounts in the
ledger
Equity
Accounts
Fee revenues
Retained Earnings
Common Stock
The Ledger cont
Asset
Accounts
Building
Fixed asset, Truck
Cash
Liability
Accounts
Bonds payable
Notes Payable
Accounts
Payable
Transfer the
journal
information to the
appropriate
accounts in the
ledger
Equity
Accounts
Fee revenues
Retained Earnings
Common Stock
Posting
Ledger –
enter
columns of
accounts
debited
Journal –
reference
column
enter
account
Ledgerenter
columns of
accounts
credited
Journal –
reference
column
enter
account
Posting cont
General Journal
1/1
GJ1
Account Titles and
Explanation
Ref
Fixed Asset, Truck
11
Accounts Payable
21
Debit
Credit
$48,350
$48,350
General Ledger – Fixed Assets,
Truck 11
Date Ref Debit Credit
Bal
General Ledger – Accounts Pay. 21
1/1
1/1 GJ1
GJ1 $48,350
$48,350
Date Ref Debit Credit
$48,350
Bal
$48,350
The Recording Process Illustrated
Don Juan Dentistry
Date
Jan 1
2
3
9
12
15
18
27
Event
Don invested $20,000 in cash to form Don Juan Dentistry.
Don made an agreement to provide $6,000 in dental services
over the next year to Chip Tooth.
Paid $600 in advance for two months’ rent of an office.
Purchased dental supplies for $400 cash.
Purchased $4,000 of equipment on credit; made a 25 percent
down payment.
Provided dental services for a $350 fee on credit.
Made a $500 payment on the equipment purchased on Jan 12.
Paid a repair bill of $140.
The Recording Process Illustrated cont
Don Juan Dentistry
Date
Jan 1
Event
Don invested $20,000 in cash to form Don Juan Dentistry.
General Journal
Jan 1
Cash
Don Juan, capital
Deposited $20,000 in cash to
form Don Juan Dentistry
Page 1
20,000
20,000
The Recording Process Illustrated cont
Don Juan Dentistry
Date
Jan 2
Event
Don made an agreement to provide $6,000 in dental services
over the next year to Chip Tooth.
The Recording Process Illustrated cont
Don Juan Dentistry
Date
Jan 3
Jan 9
Jan 3
Event
Paid $600 in advance for two months’ rent of an office.
Purchased dental supplies for $400 cash.
Prepaid Rent
600
Cash
600
Paid $600 in advance for two months rent.
Jan 9
Dental Supplies
Cash
To purchase dental supplies for cash
400
400
The Recording Process Illustrated cont
Don Juan Dentistry
Date
Event
Jan 12
Purchased $4,000 of equipment on credit; made a 25 percent
down payment.
Jan 12
Equipment
4000
Cash
1000
Accounts payable
3000
Purchased equipment on credit.
Paid $1,000 down payment.
The Recording Process Illustrated cont
Date
Jan 15
18
27
Jan 15
Event
Provided dental services for a $350 fee on credit.
Made a $500 payment on the equipment purchased on Jan 12.
Paid a repair bill of $140.
Accounts receivable
350
Dental revenues
350
Provided services on credit.
Jan 18
Accounts payable
500
Cash
500
Paid $500 for equipment purchased on Jan 12
Jan 27
Repair Expense
Cash
Paid a repair bill on equipment of $140
140
140
The Recording Process Illustrated cont
General Journal
Jan 1
Cash
Page 1
10
Don Juan, capital
20,000
50
20,000
Deposited $20,000 in cash to
form Don Juan Dentistry
General Ledger
Cash Account – 10
Date
Ref
Jan 1 GJ1
Debit
Credit
20,000
Balance
20,000
Don Juan, Capital- 50
Date
Ref
Jan 1 GJ1
Debit
Credit
20,000
Balance
20,000
The Recording Process Illustrated cont
Jan 3
Prepaid Rent
15
Cash
10
600
600
Paid $600 in advance for two months rent.
General Ledger
Prepaid Rent, 15
Date
Ref
Debit
Jan 3 GJ1
Credit
Balance
600
600
Cash Account – 10
Date
Ref
Jan 1 GJ1
Jan 3 GJ1
Debit
Credit
20,000
Balance
20,000
600
19,400
The Recording Process Illustrated cont
General Ledger
Dental Supplies
Cash Account
Date
Ref
Debit
Credit
Balance
Jan 1
GJ1
20,000
Jan 3
GJ1
600
19,400
Jan 9
GJ1
400
19,000
Jan 12 GJ1
1,000
18,000
Jan 18 GJ1
500
17,500
Jan 27 GJ1
140
17,360
20,000
Date
Ref
Jan 9
GJ1
Ref
Jan 15 GJ1
Debit
350
Credit
Credit
400
Balance
400
Equipment
Date
Ref
Jan 12 GJ1
Accounts Receivable
Date
Debit
Debit
Credit
4,000
Balance
4,000
Prepaid Rent
Balance
350
Date
Ref
Jan 3
GJ1
Debit
600
Credit
Balance
600
The Recording Process Illustrated cont
General Ledger
Dental Revenues
Accounts Payable
Date
Ref
Debit
Jan 12 GJ1
Jan 18 GJ1
Credit
3000
500
Balance
3,000
Ref
Jan 1
GJ1
Debit
Credit
20,000
20,000
Debit
Credit
Balance
350
350
Repairs Expense
Date
Balance
Ref
Jan 15 GJ1
2,500
Don Juan, Capital
Date
Date
Ref
Debit
Jan 27 GJ1
140
Credit
Balance
140
PROPERTIES
On passing, ‘Finish’ button:
On failing, ‘Finish’ button:
Allow user to leave quiz:
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Trial Balance
Don Juan Dentistry
Trial Balance
January 31, 2011
Cash
$ 17,360
Accounts Receivable
350
Dental Supplies
400
Prepaid Rent
600
Equipment
4,000
Accounts Payable
$ 2,500
Don Juan, capital
20,000
Dental Revenues
350
Repairs Expense
140
$22,850
$22,850
Trial Balance cont
Don Juan Dentistry
Trial Balance
January 31, 2011
Cash
$ 17,360
Accounts Receivable
350
Dental Supplies
400
Prepaid Rent
600
Equipment
$ 4,000
Accounts Payable
2,500
Don Juan, capital
20,000
Dental Revenues
350
Repairs Expense
140
$18,850
$26,850
PROPERTIES
On passing, ‘Finish’ button:
On failing, ‘Finish’ button:
Allow user to leave quiz:
User may view slides after quiz:
User may attempt quiz:
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At any time
At any time
Unlimited times
Summary




The account
Steps in the recording process
The recording process illustrated
The trial balance.

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