Accounting Bellwork

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Accounting Bellwork

• 6th Hour Label the following T-Accounts using
  DR, CR, and NB.
• Accounts Receivable
• Accounts Payable, Clarks Furniture
• Brad Pitt, Capital
• Computer Equip
• I will draw randomly for you to put the
  t-account on the board.

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Chapter 4

Section 2 Applying the Rules of Debit and Credit

• What Youll Learn
• How to analyze a transaction affecting assets,
  liabilities, and owners equity.

Why Its Important You need to analyze
transactions properly so that you record them
correctly.

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis Steps to Success

Steps learned in Ch3.
Business Transaction

ANALYSIS Identify 1. Identify the accounts
affected. Classify 2. Classify the accounts
affected. / - 3. Determine the amount of
increase or decrease for each account affected.

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis Steps to Success
(cont.) new steps

Business Transaction

DEBIT-CREDIT RULE 4. Which account is debited?
For what amount? 5. Which account is credited?
For what amount?

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis Steps to Success
(cont.)

Business Transaction

T ACCOUNTS 6. What is the complete entry in
T-account forms?
Account Name Account Name

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4
Review
ALOE
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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4
ALOE


Assets
Liabilities
Owners Equity


DR NB
CR NB
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Close your books.

• Refer to your demonstration problem packet.

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis
Business Transaction 1
On October 1 Maria Sanchez took 25,000 from
personal savings and deposited that amount to
open a business checking account in the name of
Roadrunner Delivery Service.


ANALYSIS Identify 1. The accounts Cash in Bank
and Maria Sanchez, Capital are affected. Classify
2. Cash in Bank is an asset account. Maria
Sanchez, Capital is an owners capital account.
/ - 3. Cash in Bank is increased by
25,000. Maria Sanchez, Capital is increased by
25,000.

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis (cont.)
Business Transaction 1 (cont.)

On October 1 Maria Sanchez took 25,000 from
personal savings and deposited that amount to
open a business checking account in the name of
Roadrunner Delivery Service.

DEBIT-CREDIT RULE 4. Increases in asset accounts
are recorded as debits. Debit Cash in Bank for
25,000. 5. Increases in the owners capital
account are recorded as credits. Credit Maria
Sanchez, Capital for 25,000.

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis (cont.)
Business Transaction 1 (cont.)

On October 1 Maria Sanchez took 25,000 from
personal savings and deposited that amount to
open a business checking account in the name of
Roadrunner Delivery Service.

Maria Sanchez, Cash in Bank Capital
T ACCOUNTS 6.
Debit 25,000
Credit 25,000

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis (cont.)

Business Transaction 3
On October 4 Roadrunner issued Check 101 for
3,000 to buy a computer system.

ANALYSIS Identify 1. The accounts Computer
Equipment and Cash in Bank are affected. Classify
2. Computer Equipment and Cash in Bank are asset
accounts. / 3. Computer Equipment is
increased by 3,000. Cash in Bank is decreased by
3,000.

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis (cont.)

Business Transaction 3 (cont.)
On October 4 Roadrunner issued Check 101 for
3,000 to buy a computer system.

DEBIT-CREDIT RULE 4. Increases in asset accounts
are recorded as debits. Debit Computer Equipment
for 3,000. 5. Decreases in asset accounts are
recorded as credits. Credit Cash in Bank for
3,000.

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis (cont.)

Business Transaction 3 (cont.)
On October 4 Roadrunner issued Check 101 for
3,000 to buy a computer system.

Computer Equipment Cash in Bank
T ACCOUNTS 6.
Debit 3,000
Credit 3,000

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis (cont.)
Business Transaction 4

On October 9 Roadrunner bought a used truck on
account from North Shore Auto for 12,000.
ANALYSIS Identify 1. The accounts Delivery
Equipment and Accounts PayableNorth Shore Auto
are affected. Classify 2. Delivery Equipment is
an asset account. Accounts PayableNorth Shore
Auto is a liability account. /
3. Delivery Equipment is increased by 12,000.
Accounts Payable North Shore Auto is increased
by 12,000.


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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis (cont.)

Business Transaction 4 (cont.)
On October 9 Roadrunner bought a used truck on
account from North Shore Auto for 12,000.

DEBIT-CREDIT RULE 4. Increases in asset accounts
are recorded as debits. Debit Delivery Equipment
for 12,000. 5. Increases in liability accounts
are recorded as credits. Credit Accounts
PayableNorth Shore Auto for 12,000.

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Business Transaction Analysis (cont.)

Business Transaction 4 (cont.)
On October 9 Roadrunner bought a used truck on
account from North Shore Auto for 12,000.

Delivery Accounts Payable Equipment North
Shore Auto
T ACCOUNTS 6.
Debit 12,000
Credit 12,000

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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4
Demonstration Problems 4-2 and 4-3
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Cash In Bank
Office Equipment
Office Equipment
Asset
Asset
Cash In Bank
Office Equipment
Increased
Cash In Bank
Decreased
4,700
Office Equipment
4,700
Cash In Bank
Office Equipment
Cash In Bank
DR
CR -
DR
CR -
4,700
4,700
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Office Supplies
Accounts Payable, Top Drawer Supplies
Office Supplies
Asset
Liabilities
Accounts Payable, Top Drawer Supplies
Office Supplies
Increased
Increased
Accounts Payable, Top Drawer Supplies
400
Office Supplies
400
Accounts Payable, Top Drawer Supplies
Accounts Payable, Top Drawer Supplies
Office Supplies
DR
CR -
DR -
CR
400
400
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Section 2 Applying the Rules of Debit and Credit
(cont.)
Chapter 4

Check Your Understanding

p83 Thinking Critically 12 Problem 4-2
Identifying Increases and Decreases in Accounts A
Matter of Ethics p82