CH 9 Accounting Practice

The Accounting Cycle
Chapter 9
Analyze Business Transactions Step 1
1. Which accounts are affected?

2. Are the accounts increasing or decreasing?
3. By how much?
Sold 6,500 of
products for cash.
Journalize the transactions Step 2
1. Which account is debited?

2. Which account is credited?
GENERAL JOURNAL
DATE PARTICULARS DEBIT CREDIT
Jan 1, 2022 Cash 6,500.00
Sales 6,500.00
To record sales of merchandise.
Post to Ledger Step 3
1. Post the entries into the T-accounts?

CASH
DATE PARTICULARS DEBIT DATE PARTICULARS CREDIT
Jan 1, 2022 Cash sales 6,500.00
Balance 6,500.00
SALES
DATE PARTICULARS DEBIT DATE PARTICULARS CREDIT
Jan 1, 2022 Cash Sales 6,500.00
Balance 6,500.00
Prepare a Trial Balance Step 4
1. List the account titles and their balances in the debit or

credit column
2. Add up the debit and credit columns
3. Prove that the total debits equal the total credits
TRIAL BALANCE
AMOUNT DEBIT CREDIT Step 4
Cash 60,000 60,000
Accounts Receivable 180,000 180,000
Inventory 300,000 300,000
Fixed assets 210,000 210,000
Accounts payable 90,000 90,000
Accrued liabilities 50,000 50,000
Notes payable 420,000 420,000
Capital 350,000 350,000
Revenue 400,000 400,000
Cost of goods sold 290,000 290,000
Salaries 200,000 200,000
Payroll taxes 20,000 20,000
Rent 35,000 35,000
Other expenses 15,000 15,000
1,310,000 1,310,000
Journalize & Post Adjusting Entries Step 5
1. One income statement (SCI) account and one balance

sheet (SFP) account
2. Debit an expense or credit a revenue
3. Never include cash
Unrecorded Sales on credit amounting to 50,000.
GENERAL JOURNAL
Dec 31, 2021 Accounts Receivable 50,000
Sales 50,000
TRIAL BALANCE
UNADJUSTED ADJUSTMENTS DEBIT CREDIT
Cash 60,000
Inventory 300,000
Fixed assets 210,000
Accounts payable (90,000)
Accrued liabilities (50,000)
Notes payable (420,000)
Capital (350,000)
Revenue (400,000) (50,000)
Cost of goods sold 290,000
Salaries 200,000
Payroll taxes 20,000
Rent 35,000
Other expenses 15,000
Unrecorded salaries of 25,000 that is not yet paid.
GENERAL JOURNAL
Dec 31, 2021 Salaries 25,000
Accrued Liabilities 25,000
TRIAL BALANCE
Cash 60,000
Inventory 300,000
Accounts payable (90,000)
Accrued liabilities (50,000) (25,000)
Notes payable (420,000)
Capital (350,000)
Revenue (400,000) (50,000)
Salaries 200,000 25,000
Rent 35,000
Prepare an Adjusted Trial Balance Step 6
1. List the account titles and their balances in the debit or

credit column
2. Add up the debit and credit columns
3. Prove that the total debits equal the total credits
ADJUSTED TRIAL BALANCE
Cash 60,000 60,000
Accounts Receivable 180,000 50,000 230,000
Inventory 300,000 300,000
Fixed assets 210,000 210,000
Accounts payable (90,000) 90,000
Accrued liabilities (50,000) (25,000) 75,000
Notes payable (420,000) 420,000
Capital (350,000) 350,000
Revenue (400,000) (50,000) 450,000
Cost of goods sold 290,000 290,000
Salaries 200,000 25,000 225,000
Payroll taxes 20,000 20,000
Rent 35,000 35,000
Other expenses 15,000 15,000
1,385,000 1,385,000
Prepare Financial Statements Step 7
Financial Statements are prepared in this order:

1. Statement of Comprehensive Income
SAMPLE CORPORATIONS
STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2021
Revenue 450,000
Cost of goods sold ( 290,000)
Gross profit 160,000
Operating Expenses
Salaries 225,000
Rent 35,000
Other expenses 15,000 (295,000)
Net Loss (135,000)

Net Income/Loss
2. Statement of Changes in Equity
SAMPLE CORPORATIONS
STATEMENT OF CHANGES IN EQUITY
Capital, January 1, 2021 350,000

Less: Net Loss (135,000)
Capital, December 31, 2021 215,000


Net Income/Loss
Ending Capital
3. Statement of Financial Position
SAMPLE CORPORATIONS
ASSETS LIABILITIES AND EQUITY

Cash 60,000 Liabilities
Accounts Receivable 230,000 Accounts payable 90,000
Inventory 300,000 Accrued liabilities 75,000
Fixed assets 210,000 Notes payable 420,000
Total Assets 800,000 Owner's Equity

Capital 215,000
Total Liabilities and Equity 800,000


Net Income/Loss
Ending Capital
3. Statement of Financial Position
Cash Balance
4. Statement of Cash Flow
SAMPLE CORPORATIONS
ASSETS LIABILITIES AND EQUITY

Cash 60,000 Liabilities
Accounts Receivable 230,000 Accounts payable 90,000
Inventory 300,000 Accrued liabilities 75,000
Fixed assets 210,000 Notes payable 420,000
Total Assets 800,000 Owner's Equity

Capital 215,000
Total Liabilities and Equity 800,000

Journalize and Post Closing Entries Step 8
Steps for closing entries:

REVENUES EXPENSES
Income
Summary
Owner’s
Capital
GENERAL JOURNAL
Dec 31, 2021 Revenue 450,000
Salaries 225,000
Rent 35,000
Income Summary 135,000
SAMPLE CORPORATIONS
STATEMENT OF CHANGES IN EQUITY
Capital, January 1, 2021 350,000

Less: Net Loss (135,000)
Capital, December 31, 2021 215,000

Prepare a Post-Closing Trial Balance Step 9
1. Only shows permanent accounts:

Assets, Liabilities, Owner’s Capital
2. Use updated balance balance for Owner’s Capital
after closing entries
3. Total Debits = Total Credits
POST-CLOSING TRIAL BALANCE Step 4
DEBIT CREDIT
Cash 60,000
Accounts Receivable 230,000
Inventory 300,000
Accounts payable 90,000
Accrued liabilities 75,000
Notes payable 420,000
Capital 215,000
800,000 800,000

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The Accounting Cycle

1. Which accounts are affected?

1. Which account is debited?

1. Post the entries into the T-accounts?

1. List the account titles and their balances in the debit or

1. One income statement (SCI) account and one balance

1. List the account titles and their balances in the debit or

Financial Statements are prepared in this order:

Financial Statements are prepared in this order:

Capital, January 1, 2021 350,000

Capital, December 31, 2021 215,000

Financial Statements are prepared in this order:

ASSETS LIABILITIES AND EQUITY

Total Assets 800,000 Owner's Equity

Total Liabilities and Equity 800,000

Financial Statements are prepared in this order:

ASSETS LIABILITIES AND EQUITY

Total Assets 800,000 Owner's Equity

Total Liabilities and Equity 800,000

Steps for closing entries:

Capital, January 1, 2021 350,000

Capital, December 31, 2021 215,000

1. Only shows permanent accounts:

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