Transactions

Cash
1. Initial investment
2. Loan from bank
3. Acquire store equipment
4. Acquire inventory for cash
5. Acquire inventory on credit
6. Acquire inventory on part cash and part credit
7. Sale of equipment
8. Return of inventory acquired
9. Payment to suppliers
10a. Sale on credit
10b. Matching the cost of sale
11. Collection of receivables
12. Rent paid in advance for 3 months
13. Recognize period cost - rent
14. Recognize period cost - depreciation
End of year balance
Does balance sheet tally?

+ Inventory

400,000
100,000
-15,000
-120,000
-10,000
1,000

+ Equipment

Assets
+ Accounts
receivables

+ Prepaid rent

+ Accumulated
depreciation

=
Liabilities
+ Accounts
= Note payable
payable

400,000
100,000
15,000
120,000
10,000
30,000

10,000
20,000
-1,000

-800

-800
-4,000

-4,000
160,000

160,000
-100,000

-100,000
5,000
-6,000

351,000

+ Owners' equity
+ Capital + RE

-5,000
6,000
-2,000
59,200

14,000

155,000

4,000

-100
-100
583,100

100,000

25,200

-2,000
-100
457,900
583,100

Entry
no.

Transactions
1 Cash

Paid-in-capital
(Capital stock issued to Lopez)
2 Cash
Notes payable
(Borrowed at 9% interest on a one-year note)
3 Store equipment
Cash
(Acquired store equipment for cash)
4 Inventory
Cash
(Acquired inventory for cash)
5 Inventory
Accounts payable
(Acquired inventory on credit)
6 Inventory
Cash
Accounts payable
(Acquired inventory for cash plus credit)
7 Cash
Equipment
(Sold store equipment to business neighbor)
8 Accounts payable
Inventory
(Returned some inventory to supplier)
9 Accounts payable
Cash
(Payments to suppliers)
10a
Accounts receivables
Sales
(Sold goods of credit)
10b
Cost of goods sold
Inventory
(Record cost of goods sold)
11 Cash
Accounts receivable
(Received cash from AR)
12 Prepaid rent
Cash
(Paid 3 months rent in advance)
13 Rent expense
Prepaid rent
(Record rent expense for the month )
14 Depreciation expense
Accumulated depreciation
( Record depreciation expense for the month)

Debit

Credit

400,000
400,000
100,000
100,000
15,000
15,000
120,000
120,000
10,000
10,000
30,000
10,000
20,000
1,000
1,000
800
800
4,000
4,000
160,000
160,000
100,000
100,000
5,000
5,000
6,000
6,000
2,000
2,000
100
100

1
2
7
11

Cash
Debits
400,000
100,000
1,000
5,000

Credits
15,000
120,000
10,000
4,000
6,000

3
4
6
9

4
5
6

59,200

Notes payable
Credits
100,000

8
9

10a

Accounts receivable
Debits
Credits
160000
5000

11

12

Credits
160,000 10a

10b

COGS
Debits
Credits
100000
100,000

155,000

Paid-in-capital
Debits
Credits
400000

5
6

25,200

Sales revenue

160,000

14,000

Accounts payable
Debits
Credits
800
10,000
4,000
20,000

100,000

Debits

Equipment
Debits
Credits
15,000
1,000

Prepaid rent
Debits
Credits
6,000
2,000

13

12

351,000

Debits

Inventory
Debits
Credits
120000
800
8
10000
100,000 10b
30000

4,000

400,000

14

Depreciation
Debits
Credits
100
100

Accu.Depreciation
Debits
Credits
100
100

14

13

Rent expense
Debits
Credits
2000
2,000

Trial balance
Transactions
Cash
Inventory
Equipment
Receivables
Prepaid rent
Notes payable
Accounts payable
Paid-in-capital
Sales
COGS
Depreciation
Accumulated depreciation
Rent expense

Debit
Credit
351,000
59,200
14,000
155,000
4,000
100,000
25,200
400,000
160,000
100,000
100
100
2,000
685,300
685,300

Income statement
Sales
COGS
Rent expense
Depreciation
Net income

Beginning RE
Net income
Dividends
Closing RE

160,000
(100,000)
(2,000)
(100)
57,900

0
57,900
0
57,900

Balance sheet
Assets
Cash
Inventory
Equipment
Less: Accumulated depreciation
Equipment, net
Receivables
Prepaid rent
Total assets
Liabilities and Equity
Accounts payable
Notes payable
Total liabilities
Shareholders' equity
Par and paid-in-capital
RE
Total SE
Total liabilities and SE

351,000
59,200
14,000
(100)
13,900
155,000
4,000
583,100

500,000

500,000

25,200
100,000
125,200

100,000
100,000

400,000
57,900
457,900

400,000
400,000

583,100

500,000