College Accounting 11 th Edition

1. 2 chapter College Accounting 11th Edition T Accounts, Debits and Credits, Trial Balance and Financial Statements

2. Learning Objective – 1

3. The T-Account Form Step 1: Add Step 2:109,070 – 53,180 = 55,890 Footings Step 1: Add Step 3: Placement

4. The T-Account Form • Normally, the footing on the increase (plus) side of an account will be larger than the footing

5. Practice Exercise 1

6. Learning Objective

7. Asset T Accounts The T account has a ___________ (such as _________). Cash Assets _________on the right side. Assets ________ on the left side. (continued)

8. Liability T Accounts Accounts Payable Liabilities __________ on the left side. Liabilities __________ on the right side. (continued)

9. Owner’s Equity T Accounts Drawing and expenses cause a ___________ in owner’s equity Owner’s investments (capital) and revenues cause an ___________ in owner’s equity

10. Expanded Fundamental Accounting Equation

11. Practice Exercise 2

12. Learning Objective

13. What is a: … Debit … Credit • What does debit mean? • Debit means “________” • Debit is abbreviated “_______” • What does credit mean? • Credit means “_________” • Credit is abbreviated “______”

14. The T Account with Debits and Credits

15. ________ ________ ________ ________

16. The critical rule to remember is … __

17. Practice Exercise 3

18. Learning Objectives

19. Recording Business Transactions in T Accounts Transaction (a): Conner deposited $90,000 in a bank account in the name of the business. Steps: Answer: _______________________________________________________________________________________ • Are the accounts increased or decreased? What accounts are involved? ___________________________ What are the classifications of the accounts involved (asset, liability, capital, drawing, revenue, expense)? _______________________________________________________________________________________

20. Recording Business Transactions in T Accounts Transaction: Conner deposited $90,000 in a bank account in the name of the business. Steps: Answer: _______________________________________________________________________________________ • Write the transaction as a debit to one account (or accounts) and a credit to another account (accounts). _______________________________________________________________________________________ Is the equation in balance after the transaction has been recorded?

21. Transaction (a)in T Account Form

22. Transaction (b): Conner’s Whitewater Adventures bought equipment, paying cash of $38,000.

23. Transaction (c): Conner’s Whitewater Adventures bought equipment, on account, for $4,320.

24. Transaction (d): Conner’s Whitewater Adventures paid a creditor, Signal Products, $2,000.

25. Transaction (e): Conner invests her personal computer, fair market value $5,200, in the business.

26. Summary - Transactions (a) - (e)

27. Let’s pause to see if the debits are equal to the credits by listing the balances of the accounts. Equal

28. Transaction (f):Conner’s Whitewater Adventures sold rafting tours for cash, $8,000.

29. Transaction(g):Conner’s Whitewater Adventures paid rent for the month, $1,250.

30. Transaction(h):Conner’s Whitewater Adventures bought computer paper, ink cartridges, invoice pads, pens and pencils, folders, filing cabinets, and 10-key calculators on account, $675.

31. Transaction(i): Conner’s Whitewater Adventures bought a three-month liability insurance policy, $1,875.

32. Transaction(j):Conner’s Whitewater Adventures received a bill for newspaper advertisement from the Times, $620.

33. Transaction(k):Conner’s Whitewater Adventures signs a contract with Crystal River Lodge to provide rafting adventures for guests. Conner’s Whitewater Adventures provides 27 one-day rafting tours and bills Crystal River Lodge for $6,750.

34. Transaction (l):Conner’s Whitewater Adventures pays on account to Signal Products, $1,500.

35. Transaction(m):Conner’s Whitewater Adventures received and paid Solar Power, Inc. for the electric bill, $225.

36. Transaction(n):Conner’s Whitewater Adventures paid on account to the Times, $620.

37. Transaction(o):Conner’s Whitewater Adventures paid the wages of a part-time employee, $2,360.

38. Transaction(p):Conner’s Whitewater Adventures bought additional equipment from Signal Products, $3,780, paying $1,850 in cash and placing the balance on account. This is a ___________ ________

39. Transaction(q):Conner’s Whitewater Adventures received $2,500 cash from Crystal River Lodge to apply against the amount billed in transaction (k).

40. Transaction(r):Conner’s Whitewater Adventures sold tours for cash, $8,570.

41. Transaction(s):J. Conner withdrew cash for her personal use, $3,500.

42. Summary of Transactions continued

43. Summary of Transactions

45. Practice Exercise 4

46. Practice Exercise 4 – Complete the T accounts

47. Learning Objective

48. Prepare a Trial Balance • List the account balances in two columns. • Left column = ____________ • Right column = _____________ • List the accounts in the same order as the chart of accounts. • _____________ • _____________ • _____________ • _____________ • _____________

49. The normal balance of each account is on its _________ side.

50. Figure 2: Trial Balance