T Account and Trial Balance - Example 1
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Example of Journal Entries and T Accounts?
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Hey everyone welcome to chapter two's
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example this is
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part one of the example, so in this video
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we're going to be doing the journal
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entries and the T tables
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and in part two the next video we're
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going to be taking everything that we
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did in this video and putting it into a
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drawback, so this is going to give you a
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couple steps in the accounting cycle
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a little bit of practice so let's go
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ahead and begin. And the problem it says
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bravo company provides consulting
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services to its customers the company
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began the year with the following
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account balances.
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So we began the year with a cash balance
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of twenty thousand dollars that means we
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ended last year with twenty thousand
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dollars
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the ending of one year becomes the
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beginning of the following uh we had a
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beginning balance of supplies of four
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hundred,
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a beginning balance of common stock of
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ten thousand,
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and a beginning balance retained
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earnings of ten thousand four 400 so
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again this
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implies that this is not the first year
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of the company we actually do have
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beginning balances,
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so in order for us to begin this problem
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or get this problem started
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we need to go ahead and get the t table
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set up for those accounts,
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so there's the pages for our t tables
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and our journal entry.
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So let's go ahead with the cash t table we
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need to create one so it's just again
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cash with a t
0:01:05.119,0:01:09.280
capital t cash tends to be a little bit
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longer because we use it more often
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it's exchanged more often so you want to
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give yourself a little bit more room on
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this one the size of your t table may
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want to be a little bit bigger
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but cash t table is an asset t table so
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it follows the plus minus
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on the debits and credits so our debit
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is plus and remember all of our balances
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should go on the normal side the normal
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side of a t table is the plus side
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so for us the beginning cash balance is
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going to go on the debit side
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and so we'll put beginning balance of
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20000.
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Supplies is next so I want to create a
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supplies t table and again supplies is
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an asset so again I'm going to put the
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400,
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balance on the debit side because that's
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the plus side or the normal side
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so beginning 400. Common stock common
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stock
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is a type of equity account and it
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follows the minus plus on the t
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table so I'm going to create my common
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stock t table and the balance of 10 000
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is going to go on the credit side
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because again that is the plus side for
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common stock,
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and lastly retained earnings files the
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same thing will create a retained
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earnings t table
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and put it on the credit side of a
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balance of 10 4.
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Now I know this looks really odd because
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I've spread all these
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accounts in different areas on the paper,
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but there's a reason behind it this is
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just something I do you don't
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necessarily have to do this you can kind
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of
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go with that your own way I just like to
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have mine kind of clean and set up
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that makes organization a little bit
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easier for me to be able to see it,
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everything on the far left is going to
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be my assets so all my assets are going
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to go in this kind of yellow area
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all of my liabilities will kind of go in
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the upper middle which is the red area
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we don't have any right now but that's
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where they will go,
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and then all of my equities on the far
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right that's kind of again my system
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you don't have to follow it if it's not
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asked of you but it's just an easy way
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to look back and say hey
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you know what is this where is it you
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know where's it going to go and all that
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good stuff so
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again my method to my madness. All right.
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So let's get into the transactions
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now that we've done the t tables now
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also too I want to point out,
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notice we didn't do any uh journal
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entries for the beginning balances
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because those have already been
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journalized last year
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beginning balances are not journalized
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for the next year because they've
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already been
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they're already on the books so we
0:03:16.080,0:03:18.000
didn't do any journal issues with for
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those,
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so now let's get into the transactions.
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On one one it says bravo company
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acquired an additional 30 000
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cash by issuing common stock that means
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somebody gave us money to invest in us
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in exchange for common stock that we
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gave back to them,
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so let's put this into a journal entry.
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Our date is 1-1 and we're going to
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follow the same
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strategy that we did in the last chapter
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where I asked myself the question
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is cash involved and in this situation
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it is our cash
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our cash is involved we received thirty
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thousand dollars cash
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and what is our cash doing, well in this
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situation it's going up
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so we're going to debit cash so I will
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start with my cash as the debit
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for thirty thousand dollars and what is
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on the other side what's its
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in exchange of uh or for and that's
0:04:03.920,0:04:06.879
going to be common stock so we're going
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to credit common stock for 30000,
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that is our first journal entry
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but now that we've done our journal
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entry we need to put it into our t
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tables now we already have these
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t-tables so we're just going to
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add them onto the already existing ones
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so on the debit side I'll put one one of
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30 000
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for cash and on the credit side of
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common stock I will do
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the same thing, and that's transaction
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one
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so let's go to transaction two. Bravo
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company completed a consultation for a
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client
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for 165 000 an invoice was sent to the
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client but not yet collected in cash,
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so in this one we've done the work we've
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sent the client the bill they just
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haven't paid for it in cash yet they
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still owe us.
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So again first question is cash involved,
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well no
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cash is not involved here because they
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haven't paid it yet so then we ask
0:04:52.400,0:04:55.040
ourselves the question
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what are we expected to do with that
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cash at a later date well that cash
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we're expected to receive
0:04:58.880,0:05:02.160
at a later date so this makes it
0:05:00.960,0:05:05.360
accounts receivable,
0:05:02.160,0:05:06.400
we will go 210 as the date and accounts
0:05:05.360,0:05:09.199
receivable is an
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asset so we're going to start with the
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debit of accounts receivable
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because we're making our asset go up and
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465 thousand,
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and then what is the other side what is
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the credit well we've done the work
0:05:19.440,0:05:23.360
we've earned this value uh so because
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we've earned it we're going to put it
0:05:23.360,0:05:25.680
into a
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revenue account and we're going to call
0:05:25.680,0:05:30.800
that just consulting revenue
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of 165 000 as a credit, so I don't have
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either one of these
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accounts as a t table so I need to
0:05:33.919,0:05:38.080
create these t tables so I'll put ar
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I'll put it again on the debit side for
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165
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and then consulting revenue put on the
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credit side
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again for 165, and that's transaction 2.
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Now if you want to and I would highly
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suggest this if you want to pause the
0:05:49.600,0:05:53.440
videos and go to the next one
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and try the next one on your on your own
0:05:53.440,0:05:55.680
and then come back and check it and then
0:05:54.800,0:05:57.120
the next one
0:05:55.680,0:05:58.880
that's a great system just to kind of
0:05:57.120,0:06:00.080
see what you do and what you don't know,
0:05:58.880,0:06:01.520
so if you want to pause it here and go
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to the next one then come come back and
0:06:01.520,0:06:04.080
check it that's
0:06:02.240,0:06:05.520
great please do that I'm going to go
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ahead and go on now.
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228 bravo company paid 20 000
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cash to its employee for work done on
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the consulting contract,
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so 228 is our date is cash involved here,
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yes cash is involved it says 20 000 cash
0:06:20.639,0:06:24.080
what is our cash doing,
0:06:22.400,0:06:26.080
our cash is now going down because we
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paid this to our employee so our cash is
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going down and in order to make cash go
0:06:27.919,0:06:30.560
down
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we need to put it as a credit, so let's
0:06:30.560,0:06:35.440
go ahead and credit cash
0:06:32.160,0:06:36.639
for 20 000. Now we need to know what the
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debit is going to be
0:06:36.639,0:06:41.440
well we've used our employees services
0:06:39.680,0:06:42.720
and what we do the things we use we
0:06:41.440,0:06:43.840
expense them so this is going to be an
0:06:42.720,0:06:44.800
expense account and I'm just going to
0:06:43.840,0:06:47.759
call it,
0:06:44.800,0:06:49.919
salaries expense because I'm paying for
0:06:47.759,0:06:51.440
their salary for twenty thousand
0:06:49.919,0:06:52.960
uh so I need to again make another t
0:06:51.440,0:06:54.160
table for salaries expense
0:06:52.960,0:06:55.840
this time it's going to go on the debit
0:06:54.160,0:06:57.120
side because it is an expense expenses
0:06:55.840,0:06:59.520
are plus minus
0:06:57.120,0:07:00.400
it is going to be 20 000 as a debit for
0:06:59.520,0:07:02.160
salaries expense
0:07:00.400,0:07:03.840
and then 20 thousand as a credit for
0:07:02.160,0:07:05.520
cash because again our cash is going
0:07:03.840,0:07:07.599
down.
0:07:05.520,0:07:10.080
All right. Transaction four on four one
0:07:07.599,0:07:11.840
bravo signed a one year lease and paid
0:07:10.080,0:07:13.360
twenty four thousand dollars up front to
0:07:11.840,0:07:16.720
rent office space
0:07:13.360,0:07:19.440
the one year lease began april 1,
0:07:16.720,0:07:21.280
so in this one we're paying for the use
0:07:19.440,0:07:22.800
of something but it's for the future use
0:07:21.280,0:07:24.400
of something we're just paying for it up
0:07:22.800,0:07:26.800
front we're prepaying for it,
0:07:24.400,0:07:27.759
okay, so let's go through our steps is
0:07:26.800,0:07:30.639
cash involved
0:07:27.759,0:07:31.039
yes cash is involved because we paid
0:07:30.639,0:07:33.759
24000
0:07:31.039,0:07:35.599
cash it doesn't say cash but it also
0:07:33.759,0:07:36.479
doesn't say on account so we assume cash
0:07:35.599,0:07:37.840
right now,
0:07:36.479,0:07:39.759
our cash is going down so that means
0:07:37.840,0:07:42.880
we're going to credit it
0:07:39.759,0:07:46.080
so I'll start with the date for one and
0:07:42.880,0:07:49.440
credit cash for 24 000.
0:07:46.080,0:07:51.280
Now the debit it's not an expense
0:07:49.440,0:07:52.879
because we haven't used yet
0:07:51.280,0:07:55.440
what we're doing is we're paying for the
0:07:52.879,0:07:57.199
right or the ownership to use it
0:07:55.440,0:07:59.120
and so therefore this is going to be an
0:07:57.199,0:08:00.800
asset and it's pretty much exactly what
0:07:59.120,0:08:04.160
it says this is going to be called
0:08:00.800,0:08:04.960
a prepaid rent, we prepaid for it up
0:08:04.160,0:08:07.440
front
0:08:04.960,0:08:08.639
and it is specific to rent a lot of
0:08:07.440,0:08:10.319
times you'll see these
0:08:08.639,0:08:12.479
with prepaid insurance or prepaid rent
0:08:10.319,0:08:14.400
the most common ones. I need to create a
0:08:12.479,0:08:15.919
t table for prepaid rent again it is an
0:08:14.400,0:08:18.000
asset so it is plus minus
0:08:15.919,0:08:19.280
so I'll put it with the assets put on
0:08:18.000,0:08:22.639
the debit side
0:08:19.280,0:08:26.400
of 24 000 and then add the 24 000 to the
0:08:22.639,0:08:29.599
credit side of cash,
0:08:26.400,0:08:32.000
that is transaction four.
0:08:29.599,0:08:35.360
Now let's go on to the next one on 415
0:08:32.000,0:08:37.200
bravo company collected 141 000
0:08:35.360,0:08:39.279
cash from its customers as a partial
0:08:37.200,0:08:42.240
settlement for the consulting job
0:08:39.279,0:08:43.120
completed on february 10th. All right. So
0:08:42.240,0:08:46.160
we know
0:08:43.120,0:08:47.040
again the date is 4 15 is cash affected
0:08:46.160,0:08:49.519
here,
0:08:47.040,0:08:50.240
yes they're paying us so our cash is
0:08:49.519,0:08:56.560
going up
0:08:50.240,0:08:57.920
so we're going to debit cash for 141 000
0:08:56.560,0:09:00.320
and then what is the credit going to be
0:08:57.920,0:09:02.560
well they're paying us for what was an
0:09:00.320,0:09:04.320
accounts receivable so they're lowering
0:09:02.560,0:09:05.600
their accounts receivable so in order to
0:09:04.320,0:09:06.480
lower it we're going to credit it so I
0:09:05.600,0:09:08.160
want to credit
0:09:06.480,0:09:09.760
accounts receivable for the same amount
0:09:08.160,0:09:11.440
141
0:09:09.760,0:09:13.360
I need to put that in my t tables so I'm
0:09:11.440,0:09:18.640
going to debit cash
0:09:13.360,0:09:21.279
for 141 and credit ar for 141,
0:09:18.640,0:09:22.640
all right that's transaction 5. All
0:09:21.279,0:09:25.839
right, let's go to six.
0:09:22.640,0:09:27.519
Bravo company was paid 18 000 cash in
0:09:25.839,0:09:29.600
advance from a client
0:09:27.519,0:09:30.880
for consulting services to be completed
0:09:29.600,0:09:32.880
over the next 12 months
0:09:30.880,0:09:35.360
beginning immediately. All right. So our
0:09:32.880,0:09:37.680
date 6-2
0:09:35.360,0:09:38.560
is cash being involved here or affected
0:09:37.680,0:09:40.640
here,
0:09:38.560,0:09:42.640
yes cash is being affected what's
0:09:40.640,0:09:44.800
happening to our cash our cash is going
0:09:42.640,0:09:47.040
up because they're paying us in advance
0:09:44.800,0:09:50.000
so if you remember back on 4-1
0:09:47.040,0:09:50.959
we prepaid for something in this one
0:09:50.000,0:09:53.519
they're prepaying
0:09:50.959,0:09:54.560
us for something, so it's kind of on the
0:09:53.519,0:09:55.920
the other end
0:09:54.560,0:09:58.000
but our cash is going up so we're going
0:09:55.920,0:09:59.519
to start by crediting cash
0:09:58.000,0:10:01.839
uh excuse me we're going to start by
0:09:59.519,0:10:05.040
debiting cash of 18 000
0:10:01.839,0:10:07.200
and then the credit this is
0:10:05.040,0:10:09.040
money that they're paying us for work to
0:10:07.200,0:10:11.839
be done but it hasn't been done
0:10:09.040,0:10:12.959
yet so we haven't earned it yet we will
0:10:11.839,0:10:14.399
when we do the work but we haven't
0:10:12.959,0:10:15.600
earned it yet so what we're going to do
0:10:14.399,0:10:19.440
is we're going to credit
0:10:15.600,0:10:21.440
unearned revenue which is liability we
0:10:19.440,0:10:23.279
still owe that service
0:10:21.440,0:10:25.600
so it is a liability unearned revenue
0:10:23.279,0:10:27.839
for 18 000 and then I'm going to again
0:10:25.600,0:10:30.720
make my t tables I'm going to add the 18000
0:10:27.839,0:10:32.320
to the debit side of cash
0:10:30.720,0:10:34.240
and I'm going to create an unearned
0:10:32.320,0:10:37.519
revenue t table
0:10:34.240,0:10:39.760
and put 18 000 on the credit side.
0:10:37.519,0:10:42.640
All right that is the sixth transaction,
0:10:39.760,0:10:45.519
let's go to the next one
0:10:42.640,0:10:45.519
I got to move some paper up.
0:10:45.760,0:10:52.480
7-1 bravo company purchased 1500
0:10:48.800,0:10:55.760
worth of supplies in cash, again
0:10:52.480,0:10:56.800
is cash involved yes cash is being
0:10:55.760,0:10:59.360
affected how,
0:10:56.800,0:11:00.240
it is going down because we purchased
0:10:59.360,0:11:03.120
the supplies
0:11:00.240,0:11:04.320
so our cash is going to go down so if
0:11:03.120,0:11:06.959
cash goes down
0:11:04.320,0:11:07.760
our date 7-1 is going to go on the credit
0:11:06.959,0:11:11.200
so cash
0:11:07.760,0:11:12.880
credit for 1 500. What is our
0:11:11.200,0:11:14.320
debit going to be well in exchange for
0:11:12.880,0:11:16.320
the cash we're getting supplies
0:11:14.320,0:11:19.680
that's going to be an asset so we will
0:11:16.320,0:11:22.959
increase our supplies by 1500
0:11:19.680,0:11:22.959
put these on our t tables
0:11:23.519,0:11:27.680
1500 on the debit side of supplies and
0:11:26.000,0:11:31.200
then 1500 on the credit
0:11:27.680,0:11:34.720
side of cash. All right. On to 7
0:11:31.200,0:11:37.519
15. on 7 15 bravo company paid
0:11:34.720,0:11:38.480
44 000 of miscellaneous expenses on
0:11:37.519,0:11:40.959
account,
0:11:38.480,0:11:42.000
so 715 is our date is cash being
0:11:40.959,0:11:44.240
involved
0:11:42.000,0:11:45.360
no cash is not being involved because it
0:11:44.240,0:11:47.040
says on account,
0:11:45.360,0:11:48.880
so that lets me know that I'm putting it
0:11:47.040,0:11:50.399
on my tab.
0:11:48.880,0:11:52.079
So what am I expected to do with this
0:11:50.399,0:11:54.240
cash at a later date well I'm expected
0:11:52.079,0:11:55.360
to pay cash at a later date for this
0:11:54.240,0:11:58.160
so this is going to be in accounts
0:11:55.360,0:12:00.160
payable accounts payable is a liability
0:11:58.160,0:12:02.079
so we're going to in order to increase
0:12:00.160,0:12:03.600
liabilities it needs to go on the
0:12:02.079,0:12:05.519
credit side so we're going to credit
0:12:03.600,0:12:09.120
accounts payable
0:12:05.519,0:12:12.320
for 44 000 and then on the other side
0:12:09.120,0:12:13.839
what are we going to debit,
0:12:12.320,0:12:15.360
well this is an expense it tells us an
0:12:13.839,0:12:16.639
expense it actually tells us the name so
0:12:15.360,0:12:18.720
we're just going to put miscellaneous
0:12:16.639,0:12:21.600
expense
0:12:18.720,0:12:23.519
for 44 000. I'm going to create a
0:12:21.600,0:12:26.560
miscellaneous expense t-table
0:12:23.519,0:12:28.480
for 44 000 on the debit side and I'm
0:12:26.560,0:12:30.320
also going to create an accounts payable
0:12:28.480,0:12:34.240
t table because I don't have one
0:12:30.320,0:12:35.519
with 44 000 on the credit side.
0:12:34.240,0:12:38.000
All right that's that transaction, let's
0:12:35.519,0:12:39.760
go to 720. Bravo company
0:12:38.000,0:12:41.600
purchased some land worth a hundred and
0:12:39.760,0:12:43.600
twenty thousand dollars for
0:12:41.600,0:12:45.360
a hundred thousand dollars cash for
0:12:43.600,0:12:47.760
future expansion,
0:12:45.360,0:12:49.279
now there's two numbers here and it's
0:12:47.760,0:12:50.320
it's here for a purpose because again we
0:12:49.279,0:12:51.200
want to go back to our accounting
0:12:50.320,0:12:52.639
principles
0:12:51.200,0:12:54.480
one of the accounting principles is the
0:12:52.639,0:12:55.600
cost principle that says that we have to
0:12:54.480,0:12:58.560
keep things recorded
0:12:55.600,0:12:58.959
at cost what it cost us. All right. So our
0:12:58.560,0:13:00.160
date
0:12:58.959,0:13:02.880
let's go ahead and get into the journal
0:13:00.160,0:13:05.920
entries our date is 720,
0:13:02.880,0:13:07.440
is cash involved yes cash is involved
0:13:05.920,0:13:09.040
what's happening to our cash it's going
0:13:07.440,0:13:09.920
down because we purchased it so we paid
0:13:09.040,0:13:13.360
the cash
0:13:09.920,0:13:14.480
cash goes down but by how much I care
0:13:13.360,0:13:16.639
about the 100000
0:13:14.480,0:13:18.320
not the 120 I don't care what it's
0:13:16.639,0:13:19.680
worth I care about what I actually paid
0:13:18.320,0:13:21.600
for it in cash
0:13:19.680,0:13:23.200
that's the cost principle so I'm going
0:13:21.600,0:13:26.000
to keep it on my books for what it costs
0:13:23.200,0:13:28.000
me in cash. So a hundred thousand dollars
0:13:26.000,0:13:29.680
and then on the debit side what am I
0:13:28.000,0:13:31.600
getting a return I'm getting land
0:13:29.680,0:13:32.959
and that land I'm gonna put again keep
0:13:31.600,0:13:34.480
it as a hundred thousand dollars I want
0:13:32.959,0:13:37.279
to make sure my debit and my credit
0:13:34.480,0:13:39.279
equal in every single one of these,
0:13:37.279,0:13:40.800
so that's what it looks like I need to
0:13:39.279,0:13:42.560
create a land t table
0:13:40.800,0:13:43.839
so there's my land t table with a
0:13:42.560,0:13:46.399
hundred thousand dollars
0:13:43.839,0:13:48.000
debit and I also need to put a hundred
0:13:46.399,0:13:52.240
thousand dollars on the
0:13:48.000,0:13:54.480
credit side for cash. All right. 815
0:13:52.240,0:13:56.079
bravo company paid 30 000 cash as a
0:13:54.480,0:13:59.279
partial settlement for its
0:13:56.079,0:14:01.680
accounts payable all right so 815
0:13:59.279,0:14:03.440
is cash involved yes because we're
0:14:01.680,0:14:05.760
paying off our accounts payable
0:14:03.440,0:14:08.160
our cash is going down therefore cash
0:14:05.760,0:14:11.360
will be credited
0:14:08.160,0:14:12.720
and also we'll put credit cash 30 000
0:14:11.360,0:14:14.560
and the other side of that is we're
0:14:12.720,0:14:15.199
paying off our accounts payable in order
0:14:14.560,0:14:17.440
to get
0:14:15.199,0:14:19.279
accounts payable decreased it needs to
0:14:17.440,0:14:20.000
go on the debit side so we're going to
0:14:19.279,0:14:22.240
debit
0:14:20.000,0:14:23.600
accounts payable for the same amount
0:14:22.240,0:14:25.440
30000,
0:14:23.600,0:14:27.279
now we need to post them to our t tables
0:14:25.440,0:14:30.399
debit accounts payable
0:14:27.279,0:14:32.720
430 000 and then credit cash for thirty
0:14:30.399,0:14:32.720
thousand.
0:14:33.040,0:14:36.639
All right. Twelve one bravo company paid
0:14:35.040,0:14:37.120
five thousand dollars in cash dividends
0:14:36.639,0:14:39.600
to its
0:14:37.120,0:14:41.920
stockholders so we've declared dividends
0:14:39.600,0:14:44.320
now we're paying them,
0:14:41.920,0:14:46.000
is cash being affected yes what's
0:14:44.320,0:14:49.199
happening to our cash it's going down
0:14:46.000,0:14:52.079
I'm going to credit cash for 5 000
0:14:49.199,0:14:52.079
again 12 1.
0:14:52.800,0:14:56.079
And then what's the other side to what's
0:14:54.320,0:14:58.399
the debit this is going to be dividends
0:14:56.079,0:14:59.839
because again it tells us dividends uh
0:14:58.399,0:15:03.279
for five thousand
0:14:59.839,0:15:06.079
I need to create a dividends t table,
0:15:03.279,0:15:07.760
so dividend t table five thousand on the
0:15:06.079,0:15:08.320
debit side and then I'm going to credit
0:15:07.760,0:15:11.760
cash t
0:15:08.320,0:15:14.639
table for the same five thousand.
0:15:11.760,0:15:16.399
The last one 12 31 bravo company signed
0:15:14.639,0:15:18.560
a contract for 187
0:15:16.399,0:15:19.519
000 in consulting services to be
0:15:18.560,0:15:21.600
completed
0:15:19.519,0:15:24.399
over the next 12 months beginning
0:15:21.600,0:15:26.240
january 1st of the next year,
0:15:24.399,0:15:28.480
so we need to figure out what the
0:15:26.240,0:15:31.519
journal entry is
0:15:28.480,0:15:32.800
well what is happening here essentially
0:15:31.519,0:15:36.320
what this is saying is,
0:15:32.800,0:15:39.839
I'm promising to do work for 12 months
0:15:36.320,0:15:40.480
and the customer is promising to pay
0:15:39.839,0:15:42.720
187000
0:15:40.480,0:15:44.320
for that work but all of that happens
0:15:42.720,0:15:46.240
next year.
0:15:44.320,0:15:47.600
Remember one of the parts of the
0:15:46.240,0:15:50.079
accounting cycle is
0:15:47.600,0:15:51.440
your ability to analyze when we need to
0:15:50.079,0:15:53.680
actually journalize
0:15:51.440,0:15:54.560
when we need to record and in this one
0:15:53.680,0:15:56.160
we're saying
0:15:54.560,0:15:57.839
I'm promising to do work and you're
0:15:56.160,0:16:00.560
promising to pay cash but all these
0:15:57.839,0:16:02.560
promises are going to be done next year
0:16:00.560,0:16:03.759
nothing is actually changing hands
0:16:02.560,0:16:06.000
nothing is actually
0:16:03.759,0:16:06.800
moving it's just simply if you want to
0:16:06.000,0:16:09.360
think about this
0:16:06.800,0:16:11.519
it is simply a handshake that says yeah
0:16:09.360,0:16:14.880
we'll do business later
0:16:11.519,0:16:18.079
and you don't recognize handshakes,
0:16:14.880,0:16:19.199
so for that reason it is going to be no
0:16:18.079,0:16:21.279
entry
0:16:19.199,0:16:22.639
it's not applicable so you would
0:16:21.279,0:16:24.079
essentially leave this one blank there
0:16:22.639,0:16:25.199
would be no journal entry if it's asking
0:16:24.079,0:16:26.560
for a journal street then you would just
0:16:25.199,0:16:28.639
put non-applicable or
0:16:26.560,0:16:30.160
or whatever the answer may be but you
0:16:28.639,0:16:31.920
can't journalize this because nothing's
0:16:30.160,0:16:35.279
happening cash is not going up,
0:16:31.920,0:16:37.920
ar is not going up or down,
0:16:35.279,0:16:38.639
ap is not going up or down, ar implies
0:16:37.920,0:16:40.800
that
0:16:38.639,0:16:42.000
we have done work and somebody owes us
0:16:40.800,0:16:44.160
money for that work
0:16:42.000,0:16:45.440
well we haven't done anything for this,
0:16:44.160,0:16:47.199
ap implies that
0:16:45.440,0:16:48.880
we owe money because we've already got
0:16:47.199,0:16:50.399
something we haven't got anything we
0:16:48.880,0:16:51.920
don't know any money,
0:16:50.399,0:16:53.920
there's no revenue because we haven't
0:16:51.920,0:16:56.000
earned anything so
0:16:53.920,0:16:57.440
this is just a non-applicable you can't
0:16:56.000,0:16:58.880
journalize this, so this is one of the
0:16:57.440,0:16:59.759
things with accounting is your ability
0:16:58.880,0:17:01.600
to look at it
0:16:59.759,0:17:03.199
and understand when you do and when you
0:17:01.600,0:17:04.880
don't have to journalize.
0:17:03.199,0:17:06.319
That's how we do the journal entries in
0:17:04.880,0:17:08.720
the t tables
0:17:06.319,0:17:10.400
for this problem, in the next video we
0:17:08.720,0:17:10.959
will be taking all this information and
0:17:10.400,0:17:14.880
putting it
0:17:10.959,0:17:16.959
into a trial balance. I hope this was
0:17:14.880,0:17:19.839
understandable to you I hope you enjoyed
0:17:16.959,0:17:19.839
it you all take care.