KEMAMPUAN AKHIR YANG DIHARAPKAN
Analyzing Transactions
PERTEMUAN #3
FEB103
6542– SRI HANDAYANI, SE, MM, MAk, CPMA
PENGANTAR
AKUNTANSI I +
LAB
PROGRAM STUDI MANAJEMEN & AKUNTANSI
FAKULTAS EKONOMI DAN BISNIS
UNIVERSITAS ESA UNGGUL
KEMAMPUAN AKHIR YANG DIHARAPKAN
Mahasiswa mampu melakukan analisis
transaksi, mencatat transaksi ke
dalam jurnal umum dan dampaknya
terhadap kondisi fnancial perusahaan
TKT306 - Perancangan Tata Letak Fasilitas
6623 - Taufqur Rachman
2
Chapter 2
Analyzing Transactions
Accounting, 21st Edition
Warren Reeve Fess
PowerPoint Presentation by Douglas Cloud
Professor Emeritus of Accounting
Pepperdine University
© Copyright 2004 South-Western, a division
of Thomson Learning. All rights reserved.
Task Force Image Gallery clip art included in this
electronic presentation is used with the
permission of NVTech Inc.
Some
Some of
of the
the action
action has
has been
been automated,
automated, so
so
click
click the
the mouse
mouse when
when you
you see
see this
this
lightning
lightning bolt
bolt in
in the
the lower
lower right-hand
right-hand
corner
corner of
of the
the screen.
screen. You
You can
can point
point and
and
click
click anywhere
anywhere on
on the
the screen.
screen.
Objectives
Objectives
1. Explain why
are used to
After
studying
Afteraccounts
studying this
this
record and
summarize
the
efects
of
chapter,
you
should
chapter, you should
transactions be
on
fnancial
statements.
able
to:
be able to:
2. Describe the characteristics of an
account.
3. List the rules of debit and credit and
the normal balances of accounts.
4. Analyze and summarize the fnancial
statement efects of transactions.
Objectives
Objectives
5. Prepare a trial balance and explain
how it can be used to discover
errors.
6. Discover errors in recording
transactions and correct them.
7. Use horizontal analysis to compare
fnancial statements from diferent
periods.
Each
Each financial
financial statement
statement
item,
item, called
called an
an account,
account, isis
included
included in
in the
the ledger.
ledger.
A
Agroup
group of
of
accounts
accounts for
for aa
business
business entity
entity isis
called
called aa ledger.
ledger.
A
Alist
list of
of the
the
accounts
accounts in
in aa ledger
ledger
isis called
called aa chart
chart of
of
accounts.
accounts.
Major Account Classifications
Assets
Assets are
are
resources
resources owned
owned
by
by the
the business.
business.
Liabilities
Liabilities are
are debts
debts
owed
owed to
to outsiders
outsiders
(creditors).
(creditors).
Cash
Supplies
Building
Accounts
receivable
Accounts
payable
Notes payable
Wages payable
Major Account Classifications
Liabilities
Liabilities are
are often
often identified
identified
on
the
balance
sheet
by
titles
on
the
balance
sheet
by
titles
Assets
are
Liabilities
are
debts
Assets are
Liabilities are debts
that
include
payable
.
that
include
payable
.
resources
owned
owed
to
outsiders
resources owned
owed to outsiders
by
(creditors).
by the
the business.
business.
(creditors).
Cash
Supplies
Building
Accounts
receivable
Accounts
payable
Notes payable
Wages payable
Major Account Classifications
Owner’s
Owner’s equity
equity
isis the
the owner’s
owner’s
right
right to
to the
the
assets
assets of
of the
the
business.
business.
Chris Clark,
Capital
Chris Clark,
Drawing
Revenues
Revenues are
are
increases
increases in
in
owner’s
owner’s equity
equity as
as
aa result
result of
of selling
selling
services
services or
or
products.
products.
Fees Earned
Fares Earned
Commission
Revenue
Expenses
Expenses are
are the
the
using
using up
up of
of assets
assets
or
or consuming
consuming of
of
services
services to
to
generate
generate revenue.
revenue.
Rent Expense
Salary Expense
Utilities
Expense
To
To assist
assist you
you in
in learning,
learning,
an
an account
account can
can be
be drawn
drawn
to
to resemble
resemble the
the letter
letter T.
T.
The
The T-Account
T-Account
Cash
The
TheT-account
T-account has
has aa title.
title.
The
The T-Account
T-Account
Cash
Left side
debit
The
The left
left side
side of
of the
the account
account isis the
the debit
debit side.
side.
The
The T-Account
T-Account
Cash
Left side
debit
Right side
credit
The
The right
right side
side of
of the
the account
account isis the
the credit
credit side.
side.
The
The T-Account
T-Account
Cash
3,750
4,300
2,900
Typical entries
850
1,400
700
2,900
Balancing
Balancing aa T-Account
T-Account
First,
First, foot
foot
the
the debit
debit
side.
side.
Cash
3,750
4,300
2,900
10,950
850
1,400
700
2,900
Cash
3,750
4,300
Next,
Next, foot
foot the
the
2,900
credit
credit side.
side.
10,950
850
1,400
700
2,900
5,850
Subtract
Subtract total
total credits
credits
Cash from
from total
total debits
debits to
to
obtain
the
account
obtain
the
account
850
3,750
balance.
balance.
5,100
4,300
2,900
10,950
1,400
700
2,900
5,850
Transactions and Balance
Sheet Accounts
(A) On
On November
November 1,
1, Chris
Chris Clark
Clark
(A)
deposits $25,000
$25,000 in
in aa bank
bank account
account
deposits
in the
the name
name of
of NetSolutions.
NetSolutions.
in
Page 1
JOURNAL
Date
Description
2005
1 Nov. 1 Cash
2
3
4
Chris Clark, Capital
Invested cash in NetSolutions.
Post.
Ref.
Debit
Credit
25 000 00
25 000 00
(A) On
On November
November 1,
1, Chris
Chris Clark
Clark
(A)
deposits $25,000
$25,000 in
in aa bank
bank account
account
deposits
in the
the name
name of
of NetSolutions.
NetSolutions.
in
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
Chris Clark, Capital
Nov. 1 25,000
(B) On
On November
November 5,
5,
(B)
NetSolutions bought
bought land
land
NetSolutions
for $20,000,
$20,000, paying
paying cash.
cash.
for
4
5
6
5 Land
20 000 00
Cash
7
Purchased land for building
8
site.
9
10
20 000 00
(B) On
On November
November 5,
5,
(B)
NetSolutions bought
bought land
land
NetSolutions
for $20,000,
$20,000, paying
paying cash.
cash.
for
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
Nov. 5 20,000
Land
Nov. 5 20,000
(C) On
On November
November 10,
10, NetSolutions
NetSolutions
(C)
purchased supplies
supplies on
on account
account
purchased
for $1,350.
$1,350.
for
10
11
12
13
14
15
16
10 Supplies
Accounts Payable
Purchased supplies on account.
1 350 00
1 350 00
(C) On
On November
November 10,
10, NetSolutions
NetSolutions
(C)
purchased supplies
supplies on
on account
account
purchased
for $1,350.
$1,350.
for
Effects of this entry in the Ledger
Supplies
Nov. 10
1,350
Accounts Payable
Nov. 10
1,350
(F) On
On November
November 30,
30, NetSolutions
NetSolutions
(F)
paid creditors
creditors on
on account,
account, $950.
$950.
paid
30
31
32
33
34
35
36
30 Accounts Payable
Cash
Paid creditors on account.
950 00
950 00
(F) On
On November
November 30,
30, NetSolutions
NetSolutions
(F)
paid creditors
creditors on
on account,
account, $950.
$950.
paid
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
18 7,500
Nov. 5 25,000
30 3,650
30 950
Accounts Payable
Nov. 30
950
Nov. 10
1,350
Rules of Debit / Credit Balance
Sheet Accounts
Debits
Asset accounts………. Increase (+)
Liability accounts…… Decrease (-)
Owner’s equity
accounts….
Decrease (-)
Credits
Decrease (-)
Increase (+)
(capital)
Increase (+)
Balance Sheet Accounts
ASSETS
LIABILITIES
Asset Accounts
Liability Accounts
Debit for
increases
(+)
Credit for
decreases
(-)
Debit for
decreases
(-)
Credit for
increases
(+)
OWNER’S EQUITY
Owner’s Equity Accounts
Debit for
decreases
(-)
Credit for
increases
(+)
(D) On
On November
November 18,
18, NetSolutions
NetSolutions
(D)
received fees
fees of
of $7,500
$7,500 from
from
received
customers for
for services
services provided
provided ..
customers
14
15
16
17
18
19
20
18 Cash
7 500 00
Fees Earned
Received fees from customers.
7 500 00
(D) On
On November
November 18,
18, NetSolutions
NetSolutions
(D)
received fees
fees of
of $7,500
$7,500 from
from
received
customers for
for services
services provided
provided ..
customers
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
18 7,500
Nov. 5 25,000
Fees Earned
Nov. 18
7,500
(E) Throughout
Throughout the
the month,
month, NetSolutions
NetSolutions
(E)
incurred the
the following
following expenses:
expenses:
incurred
wages, $2,125;
$2,125; rent,
rent, $800;
$800; utilities,
utilities,
wages,
$450; and
and miscellaneous,
miscellaneous, $275
$275 ..
$450;
18
19
30 Wages Expense
2 125 00
20
Rent Expense
800 00
21
Utilities Expense
450 00
22
Miscellaneous Expense
275 00
23
24
Cash
Paid expenses.
3 650 00
(E) Throughout
Throughout the
the month,
month, NetSolutions
NetSolutions
(E)
incurred the
the following
following expenses:
expenses:
incurred
wages, $2,125;
$2,125; rent,
rent, $800;
$800; utilities,
utilities,
wages,
$450; and
and miscellaneous,
miscellaneous, $275
$275 ..
$450;
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
18 7,500
Wages Expense
Nov. 5 25,000
30 3,650
Nov. 30
Rent Expense
Nov. 30
2,125
Utilities Expense
800
Nov. 30
Miscellaneous Expense
Nov. 30
275
450
In
In every
every entry
entry the
the sum
sum of
of
the
the debits
debits always
always equal
equal
the
the sum
sum of
of the
the credits.
credits.
(G) On
On November
November 30,
30, aa count
count revealed
revealed
(G)
that $800
$800 of
of the
the supplies
supplies inventory
inventory
that
had been
been used.
used.
had
25
26
27
30 Supplies Expense
Supplies
28
Supplies used during
29
November.
30
31
800 00
800 00
(G) On
On November
November 30,
30, aa count
count revealed
revealed
(G)
that $800
$800 of
of the
the supplies
supplies inventory
inventory
that
had been
been used.
used.
had
Effects of this entry in the Ledger
Supplies
Nov. 10
1,350 Nov. 30
Supplies Expense
800
Nov. 30
800
Double-Entry
Double-Entry Accounting
Accounting
“ Double-entry accounting is based on a simple
concept: each party in a business transaction
will receive something and give something in
return. In bookkeeping terms, what is received
is a debit and what is given is a credit. The T
account is a representation of a scale or
balance.”
Scale or
Balance
Luca Pacioli
Developer of
Double-Entry
Accounting
Receive
DEBIT
Give
CREDIT
T account
Left Side Right Side
Give
Receive
CREDIT
DEBIT
Rules of Debit / Credit Income
Statement Accounts
Expense Accounts
Debit for
increases
(+)
Credit for
decreases
(-)
Revenue Accounts
Debit for
decreases
(-)
Credit for
increases
(+)
Income Statement Accounts
Debits
Revenue accounts…… Decrease (-)
Expense accounts…… Increase (+)
Credits
Increase (+)
Decrease (-)
Withdrawals
Withdrawals
by
by the
the
Owner
Owner
(H) On
On November
November 30,
30, Chris
Chris Clark
Clark
(H)
withdrew $2,000
$2,000 in
in cash
cash from
from
withdrew
NetSolutions for
for personal
personal use.
use.
NetSolutions
Page 2
JOURNAL
Date
Description
2005
1 Nov. 30 Chris Clark, Drawing
2
Cash
3
Chris Clark withdrew cash for
4
personal use.
Post.
Ref.
Debit
Credit
2 000 00
2 000 00
(H) On
On November
November 30,
30, Chris
Chris Clark
Clark
(H)
withdrew $2,000
$2,000 in
in cash
cash from
from
withdrew
NetSolutions for
for personal
personal use.
use.
NetSolutions
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
18 7,500
Nov. 5
30
30
30
Chris Clark, Drawing
25,000
3,650
950
2,000
Nov. 30
2,000 Nov. 10
1,350
Normal Balances of Accounts
Increase
(Normal Balances)
Balance sheet accounts:
Asset Debit Credit
Liability Credit Debit
Owner’s Equity:
Capital
Credit Debit
Drawing Debit Credit
Income statement accounts:
Revenue Credit Debit
Expense Debit Credit
Decreases
Flow
Flow of
of Business
Business Transactions
Transactions
1
Transaction
authorized
4
2
Entry recorded
in journal
Transaction
takes place
5
3
Document
prepared
Entry posted to
ledger
System
System to
to Analyze
Analyze Transactions
Transactions
1. Determine whether an asset, a liability,
owner’s equity, revenue, or expense account
is affected by the transaction.
2. For each account affected by the transaction,
determine whether the account increases or
decreases.
3. Determine whether each increase or decrease
should be recorded as a debit or a credit.
Journalizing
and Posting
Dec. 11 NetSolutions
NetSolutions paid
paid aa premium
premium of
of
Dec.
$2,400 for
for aa comprehensive
comprehensive insurance
insurance
$2,400
policy covering
covering two
two years.
years.
policy
Page 2
JOURNAL
Date
Description
2005
1 Dec. 31 Prepaid Insurance
2
Cash
3
Paid premium on two-year
4
policy.
Post.
Ref.
Debit
Credit
2 400 00
2 400 00
Page 2
JOURNAL
Date
Description
2005
1 Dec. 1 Prepaid Insurance
2
Post.
Ref.
Debit
2 400 00
Cash
2 400 00
3
Paid premium on two-year
4
policy.
ACCOUNT NO. 15
ACCOUNT Prepaid Insurance
Date
2005
Dec. 1
Item
Credit
Post.
Ref.
Balance
Debit
2 400 00
Credit
Debit
2 400 00
Credit
Page 2
JOURNAL
Date
Description
2005
1 Dec. 1 Prepaid Insurance
2
Post.
Ref.
15
Debit
2 400 00
Cash
2 400 00
3
Paid premium on two-year
4
policy.
ACCOUNT NO. 15
ACCOUNT Prepaid Insurance
Date
2005
Dec. 1
Item
Credit
Post.
Ref.
2
Balance
Debit
2 400 00
Credit
Debit
2 400 00
Credit
Page 2
JOURNAL
Date
Post.
Description
Ref.
2005
1 Dec. 1 Prepaid Insurance
2
15
Debit
2 400 00
Cash
2 400 00
3
Paid premium on two-year
4
policy.
ACCOUNT Cash
Date
2005
Nov. 30
Dec. 1
Item
Credit
ACCOUNT NO. 11
Post.
Ref.
2
Balance
Debit
Credit
Debit
2 000 00
5 900 00
2 400 00
3 500 00
Credit
Page 2
JOURNAL
Date
Post.
Description
Ref.
2005
1 Dec. 1 Prepaid Insurance
2
15
Cash
Paid premium on two-year
4
policy.
ACCOUNT Cash
2005
Item
Credit
2 400 00
11
3
Date
Debit
2 400 00
ACCOUNT NO. 11
Post.
Ref.
Balance
Debit
Credit
Debit
Nov. 30
2
2 000 00
5 900 00
Dec. 1
2
2 400 00
3 500 00
Credit
Dec. 11 NetSolutions
NetSolutions paid
paid rent
rent for
for December,
December,
Dec.
$800.
$800.
14
1 Rent Expense
52
15
Cash
11
16
17
Paid rent for December.
800 00
800 00
Dec. 11 NetSolutions
NetSolutions receives
receives $360
$360 for
for three
three
Dec.
month’s rent
rent beginning
beginning December
December 1.
1.
month’s
14
15
1 Cash
14
Unearned Rent
16
Received advanced payment
17
For three months’ rent of land.
23
360 00
360 00
Dec. 44 NetSolutions
NetSolutions purchased
purchased office
office
Dec.
equipment on
on account
account from
from Executive
Executive
equipment
Supply Co.
Co. for
for $1,800.
$1,800.
Supply
18
19
4 Office Equipment
Accounts Payable
20
Purchased office equipment on
21
account.
18
21
1 800 00
1 800 00
Dec. 66 NetSolutions
NetSolutions paid
paid $180
$180 for
for aa
Dec.
newspaper advertisement.
advertisement.
newspaper
21
22
23
24
6 Miscellaneous Expense
Cash
Paid for newspaper ad.
59
11
180 00
180 00
Dec. 11
11 NetSolutions
NetSolutions paid
paid creditors
creditors $400.
$400.
Dec.
24
25
26
27
11 Accounts Payable
Cash
Paid creditors on account.
21
11
400 00
400 00
Dec. 13
13 NetSolutions
NetSolutions paid
paid aa receptionist
receptionist and
and
Dec.
part-time assistant
assistant $950
$950 for
for two
two
part-time
weeks’wages.
wages.
weeks’
Page 3
JOURNAL
Date
Description
2005
1 Dec. 13 Wages Expense
2
3
4
Cash
Paid two week’s wages.
Post.
Ref.
51
11
Debit
Credit
950 00
950 00
Dec. 16
16 NetSolutions
NetSolutions received
received $3,100
$3,100 from
from
Dec.
fees earned
earned for
for the
the first
first half
half of
of
fees
December.
December.
5
6
7
8
16 Cash
11
Fees Earned
Received fees from customers.
41
3 100 00
3 100 00
Dec. 16
16 Fees
Fees earned
earned on
on account
account totaled
totaled
Dec.
$1,750 for
for the
the first
first half
half of
of
$1,750
December.
December.
9
10
11
12
16 Accounts Receivable
Fees Earned
Received fees from customers.
12
41
1 750 00
1 750 00
Dec. 20
20 NetSolutions
NetSolutions paid
paid $900
$900 to
to Executive
Executive
Dec.
Supply Co.
Co. on
on the
the $1,800
$1,800 debt
debt owed
owed
Supply
from the
the December
December 44 transaction.
transaction.
from
13
14
20 Accounts Payable
Cash
15
Paid part of amount owed to
16
Executive Supply Co.
21
11
900 00
900 00
Dec. 21
21 NetSolutions
NetSolutions received
received $650
$650 from
from
Dec.
customers in
in payment
payment of
of their
their
customers
accounts.
accounts.
18
19
21 Cash
11
Accounts Receivable
20
Received cash from customer
21
on account.
12
650 00
650 00
Dec. 23
23 NetSolutions
NetSolutions paid
paid $1,450
$1,450 for
for
Dec.
supplies.
supplies.
22
23 Supplies
14
23
Cash
11
24
25
Purchased supplies.
1 450 00
1 450 00
Dec. 27
27 NetSolutions
NetSolutions paid
paid the
the receptionist
receptionist
Dec.
and part-time
part-time assistant
assistant $1,200
$1,200 for
for
and
two weeks’
weeks’wages.
wages.
two
27
27 Wages Expense
51
28
Cash
11
29
30
Paid two weeks’ wages.
1 200 00
1 200 00
Dec. 31
31 NetSolutions
NetSolutions paid
paid its
its $310
$310 telephone
telephone
Dec.
bill for
for the
the month.
month.
bill
31
31 Utilities Expense
54
32
Cash
11
33
34
Paid telephone bill.
310 00
310 00
Dec. 31
31 NetSolutions
NetSolutions paid
paid its
its $225
$225 electric
electric
Dec.
bill for
for the
the month.
month.
bill
Page 4
JOURNAL
Date
Description
2005
1 Dec. 31 Utilities Expense
2
3
4
Cash
Paid utility bill.
Post.
Ref.
54
11
Debit
Credit
225 00
225 00
Dec. 31
31 NetSolutions
NetSolutions received
received $2,870
$2,870 from
from
Dec.
fees earned
earned for
for the
the second
second half
half of
of
fees
December.
December.
5
6
7
8
31 Cash
11
Fees Earned
Received fees from customers.
41
2 870 00
2 870 00
Dec. 31
31 NetSolutions
NetSolutions earned
earned $1,120
$1,120 on
on
Dec.
account for
for the
the second
second half
half of
of
account
December.
December.
9
10
31 Accounts Receivable
Fees Earned
11
Recorded fees earned on
12
account.
12
41
1 120 00
1 120 00
Dec. 31
31 Chris
Chris Clark
Clark withdrew
withdrew $2,000
$2,000 for
for
Dec.
personal use.
use.
personal
14
15
31 Chris Clark, Drawing
Cash
16
Chris Clark withdrew cash
17
for personal use.
32
11
2 000 00
2 000 00
Trial Balance
NetSolutions
Trial Balance
December 31, 2005
Cash2 065 00
Accounts Receivable 2 220 00
Supplies 2 000 00
Prepaid Insurance
2 400 00
Land
20 000 00
Office Equipment
1 800 00
Accounts Payable
900 00
Unearned Rent
360 00
Chris Clark, Capital
25 000 00
Chris Clark, Drawing4 000 00
Fees Earned
16 340 00
Wages Expense 4 275 00
Rent Expense
1 600 00
Utilities Expense 985 00
Supplies Expense 800 00
Miscellaneous Expense 455 00
42 600 00 42 600 00
NetSolutions
Trial Balance
December 31, 2005
Cash2 065 00
Accounts Receivable 2 220 00
Supplies 2 000 00
Balance
Prepaid Insurance
2 400 00
Land
20 000 00
Sheet
Office Equipment
1 800 00
Accounts Payable
900 00 Items
Unearned Rent
360 00
Chris Clark, Capital
25 000 00
Chris Clark, Drawing4 000 00
Fees Earned
16 340 00
Wages Expense 4 275 00
Rent Expense
1 600 00
Utilities Expense 985 00
Supplies Expense 800 00
Miscellaneous Expense 455 00
42 600 00 42 600 00
NetSolutions
Trial Balance
December 31, 2005
Cash2 065 00
Accounts Receivable 2 220 00
Supplies 2 000 00
Prepaid Insurance
2 400 00
Land
20 000 00
Office Equipment
1 800 00
Accounts Payable
900 00
Unearned Rent
360 00
Chris Clark, Capital
25 000 00
Chris Clark, Drawing4 000 00
Fees Earned
16 340 00Statement
Wages Expense 4 275 00
of Owner’s
Rent Expense
1 600 00
Equity
Utilities Expense 985 00
Supplies Expense 800 00
Item
Miscellaneous Expense 455 00
42 600 00 42 600 00
NetSolutions
Trial Balance
December 31, 2005
Cash2 065 00
Accounts Receivable 2 220 00
Supplies 2 000 00
Prepaid Insurance
2 400 00
Land
20 000 00
Office Equipment
1 800 00
Accounts Payable
900 00
Unearned Rent
360 00
Chris Clark, Capital
25 000 00
Chris Clark, Drawing4 000 00
Fees Earned
16 340 00
Wages Expense 4 275 00
Income
Rent Expense
1 600 00
Statement
Utilities Expense 985 00
Items
Supplies Expense 800 00
Miscellaneous Expense 455 00
42 600 00 42 600 00
Errors
Errors that will not cause the
trial balance to be unequal:
1. Failure to record a transaction or to post
a transaction.
2. Recording the same erroneous amount
for both the debit and the credit parts
of a transaction.
3. Recording the same transaction more
than once.
4. Posting a part of a transaction correctly
as a debit or credit but to the wrong
account.
Correction of
Errors
Error
Correction Procedure
1. Journal entry is incorrect Draw a line through the error
but not posted. and insert correct title or
amount.
Correction of
Errors
Error
Correction Procedure
1. Journal entry is correct
incorrect Draw a line through the error
2.
not posted.
and insert correct
but posted
incorrectly.posted
errortitle
andor
post
amount.
correctly.
Correction of
Errors
Error
Correction Procedure
3. Journal entry is incorrect
Journalize and post a
and posted correcting entry.
Correcting
Correcting Errors
Errors –– An
An Example
Example
On May 5, a purchase of ofce equipment on
account was incorrectly journalized and posted
as shown.
Journal – As recorded and posted
Date
Description
May 5 Supplies
Accounts Payable
Debit
12,500
Credit
12,500
What
What would
would be
be the
the necessary
necessary
correcting
correcting entry?
entry?
Correcting
Correcting Errors
Errors –– An
An Example
Example
On May 5, a purchase of ofce equipment on
account was incorrectly journalized and posted
as shown.
Journal – As recorded and posted
Date
Description
May 5 Supplies
Accounts Payable
Date
Description
May 5 Ofce Equipment
Debit
12,500
Debit
12,500
Credit
12,500
Credit
Correcting
Correcting Errors
Errors –– An
An Example
Example
On May 5, a purchase of ofce equipment on
account was incorrectly journalized and posted
as shown.
Journal – As recorded and posted
Date
Description
May 5 Supplies
Accounts Payable
Date
Description
May 5 Ofce Equipment
Supplies
Debit
12,500
Debit
12,500
Credit
12,500
Credit
12,500
Financial
Financial Analysis
Analysis and
and
Interpretation
Interpretation
Comparing
Comparing an
an item
item in
in aa current
current
statement
statement with
with the
the same
same item
item
in
in prior
prior statements
statements isis called
called
horizontal
horizontal analysis.
analysis.
J Holmes, Attorney-at-Law
Income Statement
For the Year Ended December 31, 2005 and 2006
2006
Fees earned
Operating expenses:
Wages expense
Rent expense
Utilities expense
Supplies expense
Misc. expense
Total operating
expenses
Net income
2005
Increase (Decrease)
Amount Percent
$187,500 $150,000 $37,500 25.0%
$ 60,000 $ 45,000 $15,000 33.3%
15,000
12,000
3,000 25.0%
12,500
9,000
3,500 38.9%
2,700
3,000
(300) (10.0)%
2,300
1,800
500 27.8%
$ 92,500 $ 70,800 $21,700 30.6%
$ 95,000 $ 79,200 $15,800 19.9%
Chapter 2
The
The End
End
PERTEMUAN #3
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PENGANTAR
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KEMAMPUAN AKHIR YANG DIHARAPKAN
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transaksi, mencatat transaksi ke
dalam jurnal umum dan dampaknya
terhadap kondisi fnancial perusahaan
TKT306 - Perancangan Tata Letak Fasilitas
6623 - Taufqur Rachman
2
Chapter 2
Analyzing Transactions
Accounting, 21st Edition
Warren Reeve Fess
PowerPoint Presentation by Douglas Cloud
Professor Emeritus of Accounting
Pepperdine University
© Copyright 2004 South-Western, a division
of Thomson Learning. All rights reserved.
Task Force Image Gallery clip art included in this
electronic presentation is used with the
permission of NVTech Inc.
Some
Some of
of the
the action
action has
has been
been automated,
automated, so
so
click
click the
the mouse
mouse when
when you
you see
see this
this
lightning
lightning bolt
bolt in
in the
the lower
lower right-hand
right-hand
corner
corner of
of the
the screen.
screen. You
You can
can point
point and
and
click
click anywhere
anywhere on
on the
the screen.
screen.
Objectives
Objectives
1. Explain why
are used to
After
studying
Afteraccounts
studying this
this
record and
summarize
the
efects
of
chapter,
you
should
chapter, you should
transactions be
on
fnancial
statements.
able
to:
be able to:
2. Describe the characteristics of an
account.
3. List the rules of debit and credit and
the normal balances of accounts.
4. Analyze and summarize the fnancial
statement efects of transactions.
Objectives
Objectives
5. Prepare a trial balance and explain
how it can be used to discover
errors.
6. Discover errors in recording
transactions and correct them.
7. Use horizontal analysis to compare
fnancial statements from diferent
periods.
Each
Each financial
financial statement
statement
item,
item, called
called an
an account,
account, isis
included
included in
in the
the ledger.
ledger.
A
Agroup
group of
of
accounts
accounts for
for aa
business
business entity
entity isis
called
called aa ledger.
ledger.
A
Alist
list of
of the
the
accounts
accounts in
in aa ledger
ledger
isis called
called aa chart
chart of
of
accounts.
accounts.
Major Account Classifications
Assets
Assets are
are
resources
resources owned
owned
by
by the
the business.
business.
Liabilities
Liabilities are
are debts
debts
owed
owed to
to outsiders
outsiders
(creditors).
(creditors).
Cash
Supplies
Building
Accounts
receivable
Accounts
payable
Notes payable
Wages payable
Major Account Classifications
Liabilities
Liabilities are
are often
often identified
identified
on
the
balance
sheet
by
titles
on
the
balance
sheet
by
titles
Assets
are
Liabilities
are
debts
Assets are
Liabilities are debts
that
include
payable
.
that
include
payable
.
resources
owned
owed
to
outsiders
resources owned
owed to outsiders
by
(creditors).
by the
the business.
business.
(creditors).
Cash
Supplies
Building
Accounts
receivable
Accounts
payable
Notes payable
Wages payable
Major Account Classifications
Owner’s
Owner’s equity
equity
isis the
the owner’s
owner’s
right
right to
to the
the
assets
assets of
of the
the
business.
business.
Chris Clark,
Capital
Chris Clark,
Drawing
Revenues
Revenues are
are
increases
increases in
in
owner’s
owner’s equity
equity as
as
aa result
result of
of selling
selling
services
services or
or
products.
products.
Fees Earned
Fares Earned
Commission
Revenue
Expenses
Expenses are
are the
the
using
using up
up of
of assets
assets
or
or consuming
consuming of
of
services
services to
to
generate
generate revenue.
revenue.
Rent Expense
Salary Expense
Utilities
Expense
To
To assist
assist you
you in
in learning,
learning,
an
an account
account can
can be
be drawn
drawn
to
to resemble
resemble the
the letter
letter T.
T.
The
The T-Account
T-Account
Cash
The
TheT-account
T-account has
has aa title.
title.
The
The T-Account
T-Account
Cash
Left side
debit
The
The left
left side
side of
of the
the account
account isis the
the debit
debit side.
side.
The
The T-Account
T-Account
Cash
Left side
debit
Right side
credit
The
The right
right side
side of
of the
the account
account isis the
the credit
credit side.
side.
The
The T-Account
T-Account
Cash
3,750
4,300
2,900
Typical entries
850
1,400
700
2,900
Balancing
Balancing aa T-Account
T-Account
First,
First, foot
foot
the
the debit
debit
side.
side.
Cash
3,750
4,300
2,900
10,950
850
1,400
700
2,900
Cash
3,750
4,300
Next,
Next, foot
foot the
the
2,900
credit
credit side.
side.
10,950
850
1,400
700
2,900
5,850
Subtract
Subtract total
total credits
credits
Cash from
from total
total debits
debits to
to
obtain
the
account
obtain
the
account
850
3,750
balance.
balance.
5,100
4,300
2,900
10,950
1,400
700
2,900
5,850
Transactions and Balance
Sheet Accounts
(A) On
On November
November 1,
1, Chris
Chris Clark
Clark
(A)
deposits $25,000
$25,000 in
in aa bank
bank account
account
deposits
in the
the name
name of
of NetSolutions.
NetSolutions.
in
Page 1
JOURNAL
Date
Description
2005
1 Nov. 1 Cash
2
3
4
Chris Clark, Capital
Invested cash in NetSolutions.
Post.
Ref.
Debit
Credit
25 000 00
25 000 00
(A) On
On November
November 1,
1, Chris
Chris Clark
Clark
(A)
deposits $25,000
$25,000 in
in aa bank
bank account
account
deposits
in the
the name
name of
of NetSolutions.
NetSolutions.
in
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
Chris Clark, Capital
Nov. 1 25,000
(B) On
On November
November 5,
5,
(B)
NetSolutions bought
bought land
land
NetSolutions
for $20,000,
$20,000, paying
paying cash.
cash.
for
4
5
6
5 Land
20 000 00
Cash
7
Purchased land for building
8
site.
9
10
20 000 00
(B) On
On November
November 5,
5,
(B)
NetSolutions bought
bought land
land
NetSolutions
for $20,000,
$20,000, paying
paying cash.
cash.
for
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
Nov. 5 20,000
Land
Nov. 5 20,000
(C) On
On November
November 10,
10, NetSolutions
NetSolutions
(C)
purchased supplies
supplies on
on account
account
purchased
for $1,350.
$1,350.
for
10
11
12
13
14
15
16
10 Supplies
Accounts Payable
Purchased supplies on account.
1 350 00
1 350 00
(C) On
On November
November 10,
10, NetSolutions
NetSolutions
(C)
purchased supplies
supplies on
on account
account
purchased
for $1,350.
$1,350.
for
Effects of this entry in the Ledger
Supplies
Nov. 10
1,350
Accounts Payable
Nov. 10
1,350
(F) On
On November
November 30,
30, NetSolutions
NetSolutions
(F)
paid creditors
creditors on
on account,
account, $950.
$950.
paid
30
31
32
33
34
35
36
30 Accounts Payable
Cash
Paid creditors on account.
950 00
950 00
(F) On
On November
November 30,
30, NetSolutions
NetSolutions
(F)
paid creditors
creditors on
on account,
account, $950.
$950.
paid
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
18 7,500
Nov. 5 25,000
30 3,650
30 950
Accounts Payable
Nov. 30
950
Nov. 10
1,350
Rules of Debit / Credit Balance
Sheet Accounts
Debits
Asset accounts………. Increase (+)
Liability accounts…… Decrease (-)
Owner’s equity
accounts….
Decrease (-)
Credits
Decrease (-)
Increase (+)
(capital)
Increase (+)
Balance Sheet Accounts
ASSETS
LIABILITIES
Asset Accounts
Liability Accounts
Debit for
increases
(+)
Credit for
decreases
(-)
Debit for
decreases
(-)
Credit for
increases
(+)
OWNER’S EQUITY
Owner’s Equity Accounts
Debit for
decreases
(-)
Credit for
increases
(+)
(D) On
On November
November 18,
18, NetSolutions
NetSolutions
(D)
received fees
fees of
of $7,500
$7,500 from
from
received
customers for
for services
services provided
provided ..
customers
14
15
16
17
18
19
20
18 Cash
7 500 00
Fees Earned
Received fees from customers.
7 500 00
(D) On
On November
November 18,
18, NetSolutions
NetSolutions
(D)
received fees
fees of
of $7,500
$7,500 from
from
received
customers for
for services
services provided
provided ..
customers
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
18 7,500
Nov. 5 25,000
Fees Earned
Nov. 18
7,500
(E) Throughout
Throughout the
the month,
month, NetSolutions
NetSolutions
(E)
incurred the
the following
following expenses:
expenses:
incurred
wages, $2,125;
$2,125; rent,
rent, $800;
$800; utilities,
utilities,
wages,
$450; and
and miscellaneous,
miscellaneous, $275
$275 ..
$450;
18
19
30 Wages Expense
2 125 00
20
Rent Expense
800 00
21
Utilities Expense
450 00
22
Miscellaneous Expense
275 00
23
24
Cash
Paid expenses.
3 650 00
(E) Throughout
Throughout the
the month,
month, NetSolutions
NetSolutions
(E)
incurred the
the following
following expenses:
expenses:
incurred
wages, $2,125;
$2,125; rent,
rent, $800;
$800; utilities,
utilities,
wages,
$450; and
and miscellaneous,
miscellaneous, $275
$275 ..
$450;
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
18 7,500
Wages Expense
Nov. 5 25,000
30 3,650
Nov. 30
Rent Expense
Nov. 30
2,125
Utilities Expense
800
Nov. 30
Miscellaneous Expense
Nov. 30
275
450
In
In every
every entry
entry the
the sum
sum of
of
the
the debits
debits always
always equal
equal
the
the sum
sum of
of the
the credits.
credits.
(G) On
On November
November 30,
30, aa count
count revealed
revealed
(G)
that $800
$800 of
of the
the supplies
supplies inventory
inventory
that
had been
been used.
used.
had
25
26
27
30 Supplies Expense
Supplies
28
Supplies used during
29
November.
30
31
800 00
800 00
(G) On
On November
November 30,
30, aa count
count revealed
revealed
(G)
that $800
$800 of
of the
the supplies
supplies inventory
inventory
that
had been
been used.
used.
had
Effects of this entry in the Ledger
Supplies
Nov. 10
1,350 Nov. 30
Supplies Expense
800
Nov. 30
800
Double-Entry
Double-Entry Accounting
Accounting
“ Double-entry accounting is based on a simple
concept: each party in a business transaction
will receive something and give something in
return. In bookkeeping terms, what is received
is a debit and what is given is a credit. The T
account is a representation of a scale or
balance.”
Scale or
Balance
Luca Pacioli
Developer of
Double-Entry
Accounting
Receive
DEBIT
Give
CREDIT
T account
Left Side Right Side
Give
Receive
CREDIT
DEBIT
Rules of Debit / Credit Income
Statement Accounts
Expense Accounts
Debit for
increases
(+)
Credit for
decreases
(-)
Revenue Accounts
Debit for
decreases
(-)
Credit for
increases
(+)
Income Statement Accounts
Debits
Revenue accounts…… Decrease (-)
Expense accounts…… Increase (+)
Credits
Increase (+)
Decrease (-)
Withdrawals
Withdrawals
by
by the
the
Owner
Owner
(H) On
On November
November 30,
30, Chris
Chris Clark
Clark
(H)
withdrew $2,000
$2,000 in
in cash
cash from
from
withdrew
NetSolutions for
for personal
personal use.
use.
NetSolutions
Page 2
JOURNAL
Date
Description
2005
1 Nov. 30 Chris Clark, Drawing
2
Cash
3
Chris Clark withdrew cash for
4
personal use.
Post.
Ref.
Debit
Credit
2 000 00
2 000 00
(H) On
On November
November 30,
30, Chris
Chris Clark
Clark
(H)
withdrew $2,000
$2,000 in
in cash
cash from
from
withdrew
NetSolutions for
for personal
personal use.
use.
NetSolutions
Effects of this entry in the Ledger
Cash
Nov. 1 25,000
18 7,500
Nov. 5
30
30
30
Chris Clark, Drawing
25,000
3,650
950
2,000
Nov. 30
2,000 Nov. 10
1,350
Normal Balances of Accounts
Increase
(Normal Balances)
Balance sheet accounts:
Asset Debit Credit
Liability Credit Debit
Owner’s Equity:
Capital
Credit Debit
Drawing Debit Credit
Income statement accounts:
Revenue Credit Debit
Expense Debit Credit
Decreases
Flow
Flow of
of Business
Business Transactions
Transactions
1
Transaction
authorized
4
2
Entry recorded
in journal
Transaction
takes place
5
3
Document
prepared
Entry posted to
ledger
System
System to
to Analyze
Analyze Transactions
Transactions
1. Determine whether an asset, a liability,
owner’s equity, revenue, or expense account
is affected by the transaction.
2. For each account affected by the transaction,
determine whether the account increases or
decreases.
3. Determine whether each increase or decrease
should be recorded as a debit or a credit.
Journalizing
and Posting
Dec. 11 NetSolutions
NetSolutions paid
paid aa premium
premium of
of
Dec.
$2,400 for
for aa comprehensive
comprehensive insurance
insurance
$2,400
policy covering
covering two
two years.
years.
policy
Page 2
JOURNAL
Date
Description
2005
1 Dec. 31 Prepaid Insurance
2
Cash
3
Paid premium on two-year
4
policy.
Post.
Ref.
Debit
Credit
2 400 00
2 400 00
Page 2
JOURNAL
Date
Description
2005
1 Dec. 1 Prepaid Insurance
2
Post.
Ref.
Debit
2 400 00
Cash
2 400 00
3
Paid premium on two-year
4
policy.
ACCOUNT NO. 15
ACCOUNT Prepaid Insurance
Date
2005
Dec. 1
Item
Credit
Post.
Ref.
Balance
Debit
2 400 00
Credit
Debit
2 400 00
Credit
Page 2
JOURNAL
Date
Description
2005
1 Dec. 1 Prepaid Insurance
2
Post.
Ref.
15
Debit
2 400 00
Cash
2 400 00
3
Paid premium on two-year
4
policy.
ACCOUNT NO. 15
ACCOUNT Prepaid Insurance
Date
2005
Dec. 1
Item
Credit
Post.
Ref.
2
Balance
Debit
2 400 00
Credit
Debit
2 400 00
Credit
Page 2
JOURNAL
Date
Post.
Description
Ref.
2005
1 Dec. 1 Prepaid Insurance
2
15
Debit
2 400 00
Cash
2 400 00
3
Paid premium on two-year
4
policy.
ACCOUNT Cash
Date
2005
Nov. 30
Dec. 1
Item
Credit
ACCOUNT NO. 11
Post.
Ref.
2
Balance
Debit
Credit
Debit
2 000 00
5 900 00
2 400 00
3 500 00
Credit
Page 2
JOURNAL
Date
Post.
Description
Ref.
2005
1 Dec. 1 Prepaid Insurance
2
15
Cash
Paid premium on two-year
4
policy.
ACCOUNT Cash
2005
Item
Credit
2 400 00
11
3
Date
Debit
2 400 00
ACCOUNT NO. 11
Post.
Ref.
Balance
Debit
Credit
Debit
Nov. 30
2
2 000 00
5 900 00
Dec. 1
2
2 400 00
3 500 00
Credit
Dec. 11 NetSolutions
NetSolutions paid
paid rent
rent for
for December,
December,
Dec.
$800.
$800.
14
1 Rent Expense
52
15
Cash
11
16
17
Paid rent for December.
800 00
800 00
Dec. 11 NetSolutions
NetSolutions receives
receives $360
$360 for
for three
three
Dec.
month’s rent
rent beginning
beginning December
December 1.
1.
month’s
14
15
1 Cash
14
Unearned Rent
16
Received advanced payment
17
For three months’ rent of land.
23
360 00
360 00
Dec. 44 NetSolutions
NetSolutions purchased
purchased office
office
Dec.
equipment on
on account
account from
from Executive
Executive
equipment
Supply Co.
Co. for
for $1,800.
$1,800.
Supply
18
19
4 Office Equipment
Accounts Payable
20
Purchased office equipment on
21
account.
18
21
1 800 00
1 800 00
Dec. 66 NetSolutions
NetSolutions paid
paid $180
$180 for
for aa
Dec.
newspaper advertisement.
advertisement.
newspaper
21
22
23
24
6 Miscellaneous Expense
Cash
Paid for newspaper ad.
59
11
180 00
180 00
Dec. 11
11 NetSolutions
NetSolutions paid
paid creditors
creditors $400.
$400.
Dec.
24
25
26
27
11 Accounts Payable
Cash
Paid creditors on account.
21
11
400 00
400 00
Dec. 13
13 NetSolutions
NetSolutions paid
paid aa receptionist
receptionist and
and
Dec.
part-time assistant
assistant $950
$950 for
for two
two
part-time
weeks’wages.
wages.
weeks’
Page 3
JOURNAL
Date
Description
2005
1 Dec. 13 Wages Expense
2
3
4
Cash
Paid two week’s wages.
Post.
Ref.
51
11
Debit
Credit
950 00
950 00
Dec. 16
16 NetSolutions
NetSolutions received
received $3,100
$3,100 from
from
Dec.
fees earned
earned for
for the
the first
first half
half of
of
fees
December.
December.
5
6
7
8
16 Cash
11
Fees Earned
Received fees from customers.
41
3 100 00
3 100 00
Dec. 16
16 Fees
Fees earned
earned on
on account
account totaled
totaled
Dec.
$1,750 for
for the
the first
first half
half of
of
$1,750
December.
December.
9
10
11
12
16 Accounts Receivable
Fees Earned
Received fees from customers.
12
41
1 750 00
1 750 00
Dec. 20
20 NetSolutions
NetSolutions paid
paid $900
$900 to
to Executive
Executive
Dec.
Supply Co.
Co. on
on the
the $1,800
$1,800 debt
debt owed
owed
Supply
from the
the December
December 44 transaction.
transaction.
from
13
14
20 Accounts Payable
Cash
15
Paid part of amount owed to
16
Executive Supply Co.
21
11
900 00
900 00
Dec. 21
21 NetSolutions
NetSolutions received
received $650
$650 from
from
Dec.
customers in
in payment
payment of
of their
their
customers
accounts.
accounts.
18
19
21 Cash
11
Accounts Receivable
20
Received cash from customer
21
on account.
12
650 00
650 00
Dec. 23
23 NetSolutions
NetSolutions paid
paid $1,450
$1,450 for
for
Dec.
supplies.
supplies.
22
23 Supplies
14
23
Cash
11
24
25
Purchased supplies.
1 450 00
1 450 00
Dec. 27
27 NetSolutions
NetSolutions paid
paid the
the receptionist
receptionist
Dec.
and part-time
part-time assistant
assistant $1,200
$1,200 for
for
and
two weeks’
weeks’wages.
wages.
two
27
27 Wages Expense
51
28
Cash
11
29
30
Paid two weeks’ wages.
1 200 00
1 200 00
Dec. 31
31 NetSolutions
NetSolutions paid
paid its
its $310
$310 telephone
telephone
Dec.
bill for
for the
the month.
month.
bill
31
31 Utilities Expense
54
32
Cash
11
33
34
Paid telephone bill.
310 00
310 00
Dec. 31
31 NetSolutions
NetSolutions paid
paid its
its $225
$225 electric
electric
Dec.
bill for
for the
the month.
month.
bill
Page 4
JOURNAL
Date
Description
2005
1 Dec. 31 Utilities Expense
2
3
4
Cash
Paid utility bill.
Post.
Ref.
54
11
Debit
Credit
225 00
225 00
Dec. 31
31 NetSolutions
NetSolutions received
received $2,870
$2,870 from
from
Dec.
fees earned
earned for
for the
the second
second half
half of
of
fees
December.
December.
5
6
7
8
31 Cash
11
Fees Earned
Received fees from customers.
41
2 870 00
2 870 00
Dec. 31
31 NetSolutions
NetSolutions earned
earned $1,120
$1,120 on
on
Dec.
account for
for the
the second
second half
half of
of
account
December.
December.
9
10
31 Accounts Receivable
Fees Earned
11
Recorded fees earned on
12
account.
12
41
1 120 00
1 120 00
Dec. 31
31 Chris
Chris Clark
Clark withdrew
withdrew $2,000
$2,000 for
for
Dec.
personal use.
use.
personal
14
15
31 Chris Clark, Drawing
Cash
16
Chris Clark withdrew cash
17
for personal use.
32
11
2 000 00
2 000 00
Trial Balance
NetSolutions
Trial Balance
December 31, 2005
Cash2 065 00
Accounts Receivable 2 220 00
Supplies 2 000 00
Prepaid Insurance
2 400 00
Land
20 000 00
Office Equipment
1 800 00
Accounts Payable
900 00
Unearned Rent
360 00
Chris Clark, Capital
25 000 00
Chris Clark, Drawing4 000 00
Fees Earned
16 340 00
Wages Expense 4 275 00
Rent Expense
1 600 00
Utilities Expense 985 00
Supplies Expense 800 00
Miscellaneous Expense 455 00
42 600 00 42 600 00
NetSolutions
Trial Balance
December 31, 2005
Cash2 065 00
Accounts Receivable 2 220 00
Supplies 2 000 00
Balance
Prepaid Insurance
2 400 00
Land
20 000 00
Sheet
Office Equipment
1 800 00
Accounts Payable
900 00 Items
Unearned Rent
360 00
Chris Clark, Capital
25 000 00
Chris Clark, Drawing4 000 00
Fees Earned
16 340 00
Wages Expense 4 275 00
Rent Expense
1 600 00
Utilities Expense 985 00
Supplies Expense 800 00
Miscellaneous Expense 455 00
42 600 00 42 600 00
NetSolutions
Trial Balance
December 31, 2005
Cash2 065 00
Accounts Receivable 2 220 00
Supplies 2 000 00
Prepaid Insurance
2 400 00
Land
20 000 00
Office Equipment
1 800 00
Accounts Payable
900 00
Unearned Rent
360 00
Chris Clark, Capital
25 000 00
Chris Clark, Drawing4 000 00
Fees Earned
16 340 00Statement
Wages Expense 4 275 00
of Owner’s
Rent Expense
1 600 00
Equity
Utilities Expense 985 00
Supplies Expense 800 00
Item
Miscellaneous Expense 455 00
42 600 00 42 600 00
NetSolutions
Trial Balance
December 31, 2005
Cash2 065 00
Accounts Receivable 2 220 00
Supplies 2 000 00
Prepaid Insurance
2 400 00
Land
20 000 00
Office Equipment
1 800 00
Accounts Payable
900 00
Unearned Rent
360 00
Chris Clark, Capital
25 000 00
Chris Clark, Drawing4 000 00
Fees Earned
16 340 00
Wages Expense 4 275 00
Income
Rent Expense
1 600 00
Statement
Utilities Expense 985 00
Items
Supplies Expense 800 00
Miscellaneous Expense 455 00
42 600 00 42 600 00
Errors
Errors that will not cause the
trial balance to be unequal:
1. Failure to record a transaction or to post
a transaction.
2. Recording the same erroneous amount
for both the debit and the credit parts
of a transaction.
3. Recording the same transaction more
than once.
4. Posting a part of a transaction correctly
as a debit or credit but to the wrong
account.
Correction of
Errors
Error
Correction Procedure
1. Journal entry is incorrect Draw a line through the error
but not posted. and insert correct title or
amount.
Correction of
Errors
Error
Correction Procedure
1. Journal entry is correct
incorrect Draw a line through the error
2.
not posted.
and insert correct
but posted
incorrectly.posted
errortitle
andor
post
amount.
correctly.
Correction of
Errors
Error
Correction Procedure
3. Journal entry is incorrect
Journalize and post a
and posted correcting entry.
Correcting
Correcting Errors
Errors –– An
An Example
Example
On May 5, a purchase of ofce equipment on
account was incorrectly journalized and posted
as shown.
Journal – As recorded and posted
Date
Description
May 5 Supplies
Accounts Payable
Debit
12,500
Credit
12,500
What
What would
would be
be the
the necessary
necessary
correcting
correcting entry?
entry?
Correcting
Correcting Errors
Errors –– An
An Example
Example
On May 5, a purchase of ofce equipment on
account was incorrectly journalized and posted
as shown.
Journal – As recorded and posted
Date
Description
May 5 Supplies
Accounts Payable
Date
Description
May 5 Ofce Equipment
Debit
12,500
Debit
12,500
Credit
12,500
Credit
Correcting
Correcting Errors
Errors –– An
An Example
Example
On May 5, a purchase of ofce equipment on
account was incorrectly journalized and posted
as shown.
Journal – As recorded and posted
Date
Description
May 5 Supplies
Accounts Payable
Date
Description
May 5 Ofce Equipment
Supplies
Debit
12,500
Debit
12,500
Credit
12,500
Credit
12,500
Financial
Financial Analysis
Analysis and
and
Interpretation
Interpretation
Comparing
Comparing an
an item
item in
in aa current
current
statement
statement with
with the
the same
same item
item
in
in prior
prior statements
statements isis called
called
horizontal
horizontal analysis.
analysis.
J Holmes, Attorney-at-Law
Income Statement
For the Year Ended December 31, 2005 and 2006
2006
Fees earned
Operating expenses:
Wages expense
Rent expense
Utilities expense
Supplies expense
Misc. expense
Total operating
expenses
Net income
2005
Increase (Decrease)
Amount Percent
$187,500 $150,000 $37,500 25.0%
$ 60,000 $ 45,000 $15,000 33.3%
15,000
12,000
3,000 25.0%
12,500
9,000
3,500 38.9%
2,700
3,000
(300) (10.0)%
2,300
1,800
500 27.8%
$ 92,500 $ 70,800 $21,700 30.6%
$ 95,000 $ 79,200 $15,800 19.9%
Chapter 2
The
The End
End