c06 895867

CHAPTER 6 PLANNING GUIDE
SECTION RESOURCES
Section College & Career Readiness Professional Development
SECTION 6.1 THE ACCOUNTING CYCLE
Reading Strategy, p. 135
Writing Support, pp. 136, 137
Critical Thinking, pp. 135, 136, 137
Math Skill Practice, p. 136
Connect to History, p. 136
Teacher to Teacher, p. 137
The accounting cycle is a series of steps
done in each accounting period to keep
records in an orderly fashion.
SECTION 6.2 RECORDING TRANSACTIONS IN
THE GENERAL JOURNAL
Critical Thinking, pp. 139, 140, 141, 142,
143, 144, 146, 147, 148, 149
Differentiated Instruction, pp. 140, 145
Reading Strategy, pp. 139, 142, 144, 146,
147, 148, 150, 151
Writing Support, pp. 142, 148, 150, 151
Math Skill Practice, pp. 144, 145, 146, 147,
150
Extended Skill Practice, pp. 141, 143, 144,
145, 148, 150
Extending the Content, pp. 146, 147, 149
Common Mistakes, p. 151
21
st
Century Skills, p. 162
Spotlight on Personal Finance, p. 163
H.O.T Audit, p. 163
You can use the general journal to record
all the transactions of a business.
PACING YOUR LESSONS
Chapter Introduction Section 1 Section 2 Chapter Assessment
1 period 1 period 2 periods 1 period
P
*This pacing guide is based on a traditional 36-week course. See pp. TM38TM39 for complete pacing guide information.
132A Chapter 6
STANDARDS AND SKILLS CHAPTER 6
STANDARDS-BASED LESSON PLAN
National Standards for Business Education
Standards
1.A.2 Describe how current events impact the accounting profession
1.C.4 Apply analytical and critical decision-making skills
V.A.2 Describe the purpose of journals and ledgers and their relationship
VI.A.2 Identify and apply appropriate information technology to the accounting system
PROFESSIONAL
DEVELOPMENT
Targeted professional development is correlated throughout Glencoe Accounting.
The McGraw-Hill Professional Development Mini Clip Video Library provides
teaching strategies to strengthen academic and learning skills. Log on to glencoe.com.
In this Chapter, you will nd these Mini Clips:
Reading: Strategic Readers, p. 137
Math: Classroom and Instructional Management, p. 137
ELL: Direct Vocabulary Instruction, p. 144
Math: Multiple Approaches to Problem Solving, p. 146
Reading: Bridging Cultural Gaps, p. 149
ELL: Language Practice
*Highlighted blocks indicate areas covered in the chapter. Additional skills are also covered throughout the Teacher Edition.
Resources: Allocating Time Allocating Money
Allocating Material
and Facility Resources
Allocating Human
Resources
Information:
Acquiring and
Evaluating
Information
Organizing and
Maintaining
Information
Interpreting and
Communicating
Information
Using Computers to
Process Information
Interpersonal Skills:
Participating as a
Member of a Team
Teaching Others
Serving Clients/
Customers
Exercising Leadership
Negotiating to Arrive
at a Decision
Working With Cultural
Diversity
Systems:
Understanding
Systems
Monitoring
and Correcting
Performance
Improving and
Designing Systems
Technology: Selecting Technology
Applying Technology
to Task
Maintaining
and Troubleshooting
Technology
21st Century Skills Correlations
*See pp. TM33TM35 for detailed NBEA standards and correlations.
Chapter 6 132B
CORRELATIONS TO NATIONAL STANDARDS
FOR BUSINESS EDUCATION
See p. TM33 for a detailed correlation
chart.
Standards: I.A.2, I.B.1, I.C.4, I.C.5, V.A.2,
VI.A.2
FOCUS
The Night Agency established its
reputation early with unconventional
activities. The agency still promotes its
youthful energy, but it has become an
award-winning, highly regarded voice
in interactive communication and social
media. Its three founders laid a careful
groundwork and planned for the success
that helps the agency continue to grow.
Analyze Possible answer:
Entrepreneurs starting an advertising
agency would need to record a variety
of expenses, including the costs of
equipment, space rental or purchase,
payment to employees, and various forms
of advertising needed to make the agency
known to potential consumers. They
would also need to record income from
investments and from customer payments.
FOCUS ON THE PHOTO
Visual Literacy
Possible answer: Students should note
that without complete accurate financial
records, businesses do not know how
much they have earned and spent. Ask:
What are five business transactions
that can happen in a workplace of your
choice? Possible answer: Answers will
vary, depending on the business. For
example, a movie theater would have
sales of food items, sales of movie tickets,
food purchases, payment of fees to show
movies, payment of rent or mortgage, etc.
A clothing store would buy merchandise
on credit, sell merchandise to customers,
pay its liabilities to wholesalers, issue
payroll checks, and pay mortgage or rent.
Th Ni h A bli h d i
REAL-WORLD
Business Connection
CHAPTER
glencoe.com Get podcasts, videos, and
accounting forms.
REAL-WORLD Business Connection
FOCUS ON THE PHOTO
With numerous high-prole clients and projects, the
daily nancial transactions at a busy digital agency
like The Night Agency can include everything from
paying for advertising to hiring SEO specialists. Why is
it important for any business to keep accurate records
of daily transactions?
The Night Agency
Even advertising agencies need
to advertise. New York City-based
The Night Agency, founded by three
Syracuse University graduates, enjoyed early success
in 2004 on the streets and in the subways of New York
with creative guerilla-stylecampaigns that earned
plenty of media attention. Businesses called on The
Night Agency for their digital advertising needs; the
company has come through with innovative, award-
winning campaigns.
Connect to the Business
Accountants for The Night Agency rely on the
activities of the accounting cycle to keep accounting
records accurate and in order. The records are kept for
a certain period of time, usually a year. Just as most
school years do not begin in January, the 12-month
accounting cycle can begin in any month, depending
on the business.
Analyze
If you were just starting an advertising agency, what
types of f inancial information would you record?
BIG IDEA
Every transaction you
have with a business is
documented in some way.
Companies keep permanent
records of transactions.
RECORDING
TRANSACTIONS
IN A GENERAL
JOURNAL
6
INTRODUCING CHAPTER 6
All business transactions have to be recorded. A company is
responsible for keeping permanent records of their transactions.
Ask students why permanent records are so important. Under what
circumstances might a company need to access records that are years
or even decades old?
BIG
IDEA
132 Chapter 6
TEACH
Previewing the
Main Ideas
Use these questions and activities at the
beginning of the sections to focus on the
Main Ideas.
SECTION 6.1 THE ACCOUNTING CYCLE
Ask: How might a business prove that
it earned money? Answers may include
invoices or copies of receipts given. Tell
students that companies keep documents
as evidence of business transactions.
The first step of the accounting cycle
is collecting and verifying source
documents.
SECTION 6.2 RECORDING TRANSACTIONS
IN THE GENERAL JOURNAL
Ask: Why do people use journals?
Journals are a way to keep track of
daily activities, travels, expenses, calorie
counts, and other things a person may
find helpful or interesting to record.
Tell students that they will learn how
a business uses a journal to record
transactions.
133
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be found on McGraw-Hill Connect.
Online Learning Center
Get activity and game ideas, reproducible forms,
and links to additional accounting resources.
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Chapter 6 133
Before You Read Before You Read
READING GUIDE S
T
A
N
D
A
R
D
S
1. CCR stand text
2. CCR stand text
ACADEMIC
English Language Arts
NCTE 4 Use common
written language to
communicate effectively.
(p. 154)
Mathematics
NCTM Problem Solving
Solve problems that arise in
mathematics and in other
contexts. (p. 154)
NCTE National Council of
Teachers of English
NCTM National Council of
Teachers of Mathematics
Main Idea
The accounting cycle is a series of steps done in each accounting
period to keep records in an orderly fashion. You can use the general
journal to record all of the transactions of a business.
CHAPTER 6
The Essential Question How do businesses keep permanent
records of transactions?
Concepts
C1 Explain the first
three steps in the
accounting cycle.
(p. 135)
C2 Give and
describe several
examples of source
documents. (p. 136)
Analysis
A3 Explain
the purpose of
journalizing. (p. 137)
A4 Apply
information from
source documents.
(p. 139)
Procedures
P1 Describe the
steps to make a
general journal
entry. (p. 140)
P2 Make general
journal entries.
(p. 140)
P3 Correct errors
in general journal
entries. (p. 151)
Chapter Objectives
Common Core
Writing Write narratives
to develop real or imagined
experiences or events using
effective technique, well-chosen
details, and well-structured
event sequences.
134 Chapter 6 Recording Transactions in a General Journal
FOCUS
READING GUIDE
Before You Read
The Essential Question The essential
question encourages students to inquire
about the underlying purpose of
accounting. Use the essential question
as a discussion starter, emphasizing to
students that there are no right or wrong
answers.
Main Idea
Have students read the Main Idea in Before
You Read. Ask: What happens if you
dont keep nancial records in an orderly
fashion? Possible answers include wasted
time, unpaid bills, and overdrawn accounts.
Chapter Objectives
Have students review the objectives to
set expectations for what theyll learn in
Chapter 6.
Academic Standards
Help students see cross-curricular
connections whenever possible.
College and Career Readiness
standards emphasize skills and
concepts students will need beyond
high school.
Connect to the
Reading Guide
Use the following questions to help
students connect to the reading.
1. What does the chapter title tell you?
Predict
2. What do you already know about this
subject from personal experience?
Activate Prior Knowledge
3. What have you learned about
this in the earlier chapters? Make
Connections
4. What gaps exist in your knowledge of
this subject? Set a Purpose for Reading
CHAPTER 6 RESOURCES MANAGER
Print
Chapter Study Guides and Work-
ing Papers pp. 6592
Fast File Chapter 6 Resources
Digital Transparencies
(TeacherWorks Plus)
Section 6.1: Transparencies 6-1 to
6-3
Section 6.2: Transparencies 6-4 to
6-20
Technology
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and Applications
Using QuickBooks with
Glencoe Accounting
Online
McGraw-Hill Connect
Glencoe Accounting Online
Learning Center
134 Chapter 6
SECTION VOCABULARY
Content Vocabulary
accounting cycle
source document
invoice
receipt
memorandum
check stub
journal
journalizing
fiscal year
calendar year
Academic Vocabulary
occurs
designated
THE ACCOUNTI NG CYCLE
SECTION 6.1
In earlier chapters you learned to use the accounting equation and
T accounts to analyze business transactions. In this chapter you will learn
how to record business transactions in a journal.
The Steps of the Accounting Cycle
What Is the Accounting Cycle?
The accounting period of a business is separated into activities called
the accounting cycle. These activities help the business keep its accounting
records in an orderly fashion. Take a look at Figure 61, which describes
accounting activities and their sequence.
In this chapter you will use Steps 1, 2, and 3 of the accounting cycle:
1. Collect and verify source documents.
2. Analyze each transaction.
3. Journalize each transaction.
After studying Chapters 3 through 10, you will have covered the entire
accounting cycle for a service business organized as a sole proprietorship.

4 4
5 5
6 6
7 7
8 8
9 9
Collect and verify
source documents
Analyze each
transaction
Journalize
each transaction
Post to
the ledger
Prepare a
trial balance
Prepare a
work sheet
Prepare financial
statements
Journalize and post
closing entries
Prepare a
post-closing
trial balance
INVOICE
RECEIPT
MEMORANDUM
LEDGER
GENERAL
JOURNAL
TRIAL
BALANCE
WORK SHEET
INCOME
STATEMENT
STATEMENT OF
CHANGES IN
OWNER'S EQUITY
BALANCE
SHEET
POST-CLOSING
TRIAL BALANCE
GENERAL
JOURNAL
LEDGER
ACCOUNT
DEBIT CREDIT
ACCOUNT
DEBIT CREDIT
2 2
3 3
1 1
Figure 61 Steps in the
Account ing Cycle with Steps
1, 2, 3 Highlighted
glencoe.com
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activities.
Section 6.1 The Accounting Cycle 135
C
R
SECTION 6.1
FOCUS
Bell Ringer
Creating Analogies: Have students
choose an activity they do every
day, such as using their lockers.
Ask students to write the steps
they follow. Have volunteers share
their steps. Make the point that
accountants follow a set of steps to
make the accounting system work.
Digital Transparency 6-1 focuses
students attention on the topics
covered in Section 6.1.
Bell Ringer
TEACH
R

Reading Strategy
Activating Prior Knowledge Ask:
A cycle is a sequence of events that occurs
over and over. How have you heard the
word cycle used? a cycle on a washing
machine; the rotating wheels of a bicycle,
etc. BL
C

Critical Thinking
Making Inferences Tell students
to examine Figure 6-1 (Digital
Transparency 6-2). Ask: Why do you
think an arrow points from Step 5 back
to Step 1? Steps 1 through 5 occur many
times throughout the accounting period
typically every day. Steps 6 through
9 occur only once in each accounting
period. AL
PRETEACHING SECTION VOCABULARY
Content Vocabulary
Guide students in reading and
discussing the content vocabulary
terms. Ask these questions:
What does the word cycle tell you
about the steps in the accounting
cycle? They are repeated in order.
How are the terms source document,
invoice, receipt, memorandum, and
check stub related? How is each
different from the others?
How is an accounting journal similar
to a diary type of journal?
What are the similarities and
differences between a scal year and
a calendar year?
Academic Vocabulary
Read the following sentences to
students. Ask them to use context
clues to dene the academic
vocabulary word in each sentence.
1. The celebration used to take place
once a month, but now it occurs
every week. takes place
2. The name of the payee should be
indicated on this line of the check,
but no name has been designated.
indicated
Chapter 6 135
The First Step in the Accounting Cycle:
Collecting and Verifying Source Documents
Most business transactions take place during the daily operations of a busi-
ness. In the course of one day, a business may pay its rent, place an ad in a local
newspaper, contract to have a Web site created, pay its employees, sell products,
and purchase new equipment. When a business transaction occurs, a paper
is prepared as evidence of that transaction. This paper is a source document.
There are several types of source documents that can be prepared by
hand, by computer, or by a machine. The type of source document prepared
depends on the nature of the transaction. Figure 62 describes and illus-
trates commonly used source documents.
Invoice
The invoice lists specific information about
a business transaction involving the buying
or selling of an item on account. The invoice
contains the date of the transaction; the
quantity, description, and cost of each item;
and the payment terms.
Receipt
A receipt is a record of cash received by a
business. It indicates the date the payment
was received, the name of the person or
business from whom the payment was
received, and the amount of the payment.
Memorandum
A memorandum is a brief written
message that describes a transaction that
takes place within a business. A
memorandum is often used if no other
source document exists for the business
transaction.
Check Stub
The check stub lists the same information
that appears on a check: the date written,
the person or business to whom the check
was written, and the amount of the check.
The check stub also shows the balance in the
checking account before and after each
check is written.
St b
Dollars Cents
Balance brought forward
Add deposits
Total
Less this check
Balance carried forward
$
Date
To
For
20
25,000 00

25,000 00
250 00
24,750 00
No. 110 250.00
November 2 --
Info-Systems
fax/modem
voice
TO
DATE:
ORDER NO.:
SHIPPED BY:
TERMS:
QTY. ITEM UNIT PRICE TOTAL
INVOICE NO. 479
Zip Delivery Service
155 Gateway Blvd.
Sacramento, CA 94230
KELLYS OFFICE SUPPLIES
354 Circle Drive. #150
Santa Monica, CA 90405
3 Office Chairs $ 99.00 $ 297.00
Dec. 1, 20--
150
Truck
Payable in 30 days
RECEIVED FROM $
DOLLARS
FOR
RECEIPT
RECEIVED BY
20 --
Greer's Market 200.00
Two hundred and no/100
Deliveries 11/26/20--
Crista Vargas
Nov. 26
No. 2
155 Gateway Blvd.
TO:
FROM:
DATE:
SUBJECT:
MEMORANDUM 1
I have contributed $25,000 from my personal savings to be deposited to the
business, Zip Delivery Service.
Accounting Clerk
Crista Vargas
October 1, 20--
Contributed personal funds to the business
155 Gateway Blvd.
Figure 62 Source Documents
M
W
C
SECTION 6.1
TEACH
WWriting Support
Expository Writing Tell students to
write down three source documents they
might use in their personal lives. Ask:
What problems might arise if you did not
keep source documents? Have students
write a paragraph on the importance
of keeping source documents for their
personal records. Students might discuss
keeping receipts to obtain a refund on
a purchased item or to plan a monthly
budget, keeping paycheck stubs to
compare with the amount reported on the
Form W-2. OL
C Critical Thinking
Drawing Conclusions Tell
students to examine Figure 6-2 (Digital
Tranparency 6-3). Ask: Would the buyer
and seller use the identical invoice? Yes.
The seller gives the invoice to the buyer but
retains a copy for his or her records. BL
MMath Skill Practice
Maintaining a Checkbook Give
students this scenario: Your checkbook
balance is $965.00. You then deposit
$250.55 into the account. You also write
a check for $193.30. What is your new
checking account balance? $965.00
$250.55 $193.30 $1,022.25 OL
C
onnect to History CC
oonnnneeccttt tttoo HHHiiissttoorryy rr
136 Chapter 6
Using TV Monitors A 36-inch computer/TV monitor helps to enhance automated
accounting presentations. Use the monitor to display the lesson objectives when you
introduce the lesson. Or use the monitor to guide students through beginning exercises,
study guides, and problems, and include class participation. Coordinate the learning
exercises with the electronic eld trips, and create custom presentations to introduce or
reinforce lessons.
Barbara Young
Madison High School, Madison, Virginia
PROFESSIONAL
DEVELOPMENT
Reading: Strategic Readers Author
Scott Paris discusses the characteristics
of strategic readers.
T
E
A
CH
E
R
T
E
A
CH
E
R
TO
AA
CCHH
The business owner, accountant, or accounting clerk (depending on
the size of the business) uses source documents generated by business
transactions to keep the records of the business. The accounting cycle starts
by collecting and verifying the accuracy of source documents.
The Second Step in the Accounting Cycle:
Analyzing Business Transactions
After collecting and verifying source documents, the second step in the
accounting cycle can beginanalyzing information on the source docu-
ments to determine the debit and credit parts of each transaction.
You have already learned how to analyze business transactions using
the rules of debit and credit. When you learned to analyze transactions, you
were given a description of each transaction, such as: Zip Delivery Service
bought a computer system from Info-Systems Inc. for $3,000 and issued
Check 101 in payment. On the job you will not get a description of the
transaction. Instead, you must examine a source document to determine
what occurred during a business transaction.
The Third Step in the Accounting Cycle:
Recording Business Transactions in a Journal
You are now ready to apply information from source documents. The
third step in the accounting cycle is to record the debit and credit parts of each
business transaction in a journal. A journal is a record of the transactions of a
business. Journals are kept in chronological order, that is, the order in which
the transactions occur. The process of recording business transactions in a
journal is called journalizing. Keeping a journal can be compared to keeping
a diary in which all important events are written. A journal is the only place
where complete details of a transaction, including both the debit and credit
parts, are recorded. The journal is sometimes called the book of original entry
because it is where transactions are first entered in the accounting system.
Reading Check Why are source documents necessary to a
business?
The Accounting Period
What Are the Two Types of Accounting Periods?
As discussed in Chapter 2, accounting records are summarized for a
certain period of time, called an accounting period. An accounting period
may be for any designated length of time, such as a month, a quar-
ter, or a year. Most businesses use a year as their accounting period. An
accounting period of 12 months is called a fiscal year. If the fiscal year
for a business begins on January 1 and ends on December 31,it is called a
calendar year accounting period. Many businesses start their accounting
periods in months other than January. For example, department stores often
have fiscal years that begin on February 1 and end on January 31 of the
following year. School districts usually have fiscal years that begin on
July 1 and end on June 30.
Section 6.1 The Accounting Cycle 137
W
C
1
C
2
SECTION 6.1
TEACH
WWriting Support
Parts of Speech Have students look
up record in a dictionary. Ask them to
write one sentence using the word as a
verb and one sentence using it as a noun.
You record transactions in a journal. In
this usage the word is a verb, pronounced
re-cord. The journal is a record of
transactions. In this usage the word is a
noun, pronounced rec-ord. OL
C
1
Critical Thinking
Connecting to Financial
Literacy Remind students that
accounting reports summarize
information for a specic period.
Ask: What accounting period do most
individuals use in their personal lives?
Most individuals use the calendar year
because it is required for income tax
reporting. OL
C
2
Critical Thinking
Making Inferences Point out that
different kinds of businesses use different
accounting periods. Ask: Why do school
districts usually have a scal year running
from July 1 to June 30? June usually
marks the end of the school year. After
June the schools activity is at its lowest.
Ask: Why do department stores typically
have accounting periods that begin
February 1 and end January 31? Business
activity is at its lowest after the holiday
rush and postholiday sales. OL
Reading Check
A source document is evidence of a
transaction.
Chapter 6 137
ASSESS
SECTION 6.1 ASSESSMENT RESOURCES
Use these resources to assess mastery of
section content.
Chapter Study Guides and Working
Papers (Problem 6-1)
Presentation Plus!
glencoe.com
Online Learning Center: Click
on Student Center. Click on
Self-Assessment Quizzes and
select Chapter 6.
SECTION 6.1 ASSESSMENT ANSWERS
Reinforce the Main Idea
1. Collect and Verify Source Documents:
documents all transactions
2. Analyze Business Transactions:
ensures correct accounts are used
3. Record Business Transactions in a
Journal: provides an easy-to-use
record
Math for Accounting
Napkins $29.28; salt $9.57; paper plates
$21.84; paper cups, medium $32.96;
total $93.65 (amount to be used in the
journal entry)
PROBLEM 61
1. JayMax Ofce Supply
2. Darios Accounting Services
3. April 9, 20--
4. 479
5. Fax Machine
6. $299
7. Payable in 30 days
CLOSE
Synthesizing Write the following
sentence on the board: Record the debit
and credit amounts in a journal. Ask:
Which step in the accounting cycle is
associated with this activity? Step 3,
Journalize each transaction.
SECTION 6.1
1. What is the rst step of the accounting cycle? Collect and verify source documents.
2. What is the second step? Analyze each transaction.
3. Where do you get the information used to analyze transactions? source documents
4. What is the third step of the accounting cycle? Journalize each transaction.
5. What is another name for the journal? book of original entry
Q
U
I
Z
Step Number Step Description
How This Step Helps Organize
Business Records
After You Read
Math for
Accounting
Glens Catering received
an invoice from Conover
Restaurant Suppliers for
the following supplies:
6 cartons of napkins
at $4.88 per carton
3 boxes of salt
packets at $3.19
per box
3 boxes of paper
plates at $7.28
per box
4 boxes of medium
paper cups at $8.24
per box
Calculate the total
for each item on the
invoice. Then calculate
the total for all items.
PROBLEM 61 Analyzing a Source Document
INSTRUCTIONS Analyze the invoice shown below and answer the
following questions.
TO
DATE:
ORDER NO.:
SHIPPED BY:
TERMS:
INVOICE NO. 479
Darios Accounting Services
5821 Gulf Blvd.
Naples, FL 33940
1 Fax Machine $ 299.00 $ 299.00
Apr. 9, 20--
Truck
Payable in 30 days
554 Town Square
Fort Myers, FL 33902
JAYMAX OFFICE SUPPLY
1. What is the name of the company providing the service or merchandise?
2. What is the name of the business receiving the service or merchandise?
3. What is the date of the invoice?
4. What is the invoice number?
5. What item was sold?
6. What is the price for this item?
7. What are the payment terms?
Create a table similar to this
one to describe how the first
three steps of the accounting
cycle help organize the
records of a business.
SECTION 6.1 ASSESSMENT
SECTI ON 6.1
138 Chapter 6
FOCUS
Bell Ringer
Summarizing: Have students think
about the transactions analyzed
in earlier chapters. Ask: What
information did you gain? Students
should include the six items shown
in Figure 6-3.
Digital Transparency 6-4 focuses
students attention on the topics
covered in Section 6.2.
Bell Ringer
TEACH
C

Critical Thinking
Making Inferences Refer students
to Figure 6-3 (Digital Tranparency 6-5).
Ask: Why is it important to follow this
format when creating a journal entry? It is
standardized and easy to follow. OL
R Reading Strategy
Reading Accounting Forms Draw
students attention to the Description
column in Figure 6-3. Ask: Where does
the debit part of the entry begin? at the
left edge of the column Ask: Where does
the credit part begin? to the right of the
debit part, indented one-half inch from
the left edge OL
SECTION VOCABULARY
Content Vocabulary
general journal
Academic Vocabulary
manual
In Section 6.1 you learned about the first three steps in the accounting
cycle. Lets apply these steps to business transactions for Zip Delivery Service.
Recording a General Journal Entry
How Do You Record a General Journal Entry?
Many kinds of accounting journals are used in business. One of the most
common is the general journal. As its name suggests, the general journal
is an all-purpose journal in which all of the transactions of a business
may be recorded. Figure 63 shows the general journal you will be using
throughout the accounting cycle for Zip Delivery Service. The general
journal has two amount columns. The first amount column, the amount
column on the left, is used to record debit amounts. (Remember that debit
means left.) The second amount column, the amount column on the right,
is used to record credit amounts. (Remember that credit means right.) Look
at Figure 63 to find where each component of a general journal entry
appears.
GENERAL JOURNAL PAGE
1
2
3
4
5
1
2
3
4
5
DEBIT CREDIT DESCRIPTION DATE
POST.
REF.

Year
Month 1 0 0 0 00
1 0 0 0 00
Debited Account Name
Credited Account Name
Explanation
Day

1 Date of the transaction
2 Name of the account debited 3 Amount of the debit
4 Name of the account credited 5 Amount of the credit
6 Source document reference
or an explanation
In Chapters 4 and 5, you learned a step-by-step method for analyzing
business transactions. In this chapter you will learn to complete the journal
entry for a business transaction in the same manner. Review the following
steps before you continue.
RECORDI NG TRANSACTI ONS I N
THE GENERAL JOURNAL
SECTION 6.2
Figure 63 General
Journal for Zip Delivery
Service
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Let Me Try interactive
activities.
Section 6.2 Recording Transactions in the General Journal 139
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SECTION 6.2
Content Vocabulary
To introduce the content vocabulary
term, ask students these questions:
What is a journal? What is an antonym
of specialized? Based on these ideas,
what do you think the vocabulary
term general journal means?
Then have students compare their
responses to the Glossary denition.
Academic Vocabulary
Tell students that knowing the
derivation, or origin, of words can
help us recall and understand
their meaning. The word manual
comes from a Latin word, manus,
meaning hand. A manual system
of journalizing transactions, then, is
done by hand. Ask students to suggest
other contexts in which they use the
word manual. How are those uses
related to the derivation of the word?
PRETEACHING SECTION VOCABULARY
Chapter 6 139
PROFESSIONAL
DEVELOPMENT
Math: Classroom and Instructional
Management Dr. Gilbert Cuevas
discusses issues of classroom and
instructional management
6. What is the complete entry in T-account form?
Identify
Classify
/
T ACCOUNTS
4. Which account is debited? For what amount?
5. Which account is credited? For what amount?
DEBIT-CREDIT RULE
1. Identify the accounts affected.
2. Classify the accounts affected.
3. Determine the amount of increase or decrease for each account
affected.
ANALYSIS
BUSINESS TRANSACTION ANALYSIS: Steps to Success
Busi ness Tr ansac t i on
7. What is the complete entry in general journal form?
JOURNAL ENTRY
Identify
Classify
/
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
Crista Vargas, Capital for $25,000.
DEBIT-CREDIT RULE
1. The accounts Cash in Bank and Crista Vargas, Capital are affected.
2. Cash in Bank is an asset account. Crista Vargas, Capital is an owners
equity account.
3. Cash in Bank is increased by $25,000. Crista Vargas, Capital is
increased by $25,000.
ANALYSIS
On October 1 Crista Vargas took $25,000 from
personal savings and deposited that amount to open
a business checking account in the name of Zip
Delivery Service, Memorandum 1.
Busi ness Tr ansac t i on 1
Use these steps to determine the debit and credit parts of each
journal entry. Remember, it is always helpful to use T accounts to analyze
transactions. After analyzing many transactions, you will find that you need
these tools less and less to determine the debit and credit parts of a journal
entry. After the complete entry is recorded, verify that the total debits and
total credits are equal.
Now, lets examine business transactions and their analysis for Zip
Delivery Service.
TO:
FROM:
DATE:
SUBJECT:
MEMORANDUM 1
I have contributed $25,000 from my personal savings for a deposit to the
business, Roadrunner Delivery Service.
Accounting Clerk
Crista Vargas
October 1, 20--
Contributed personal funds to the business
155 Gateway Blvd.
C
SECTION 6.2
TEACH
C

Critical Thinking
Synthesizing Refer students to the
Business Transaction model at the top of
the page (Digital Tranparency 6-6). Tell
students to look at the seven numbered
steps. Ask: Which step represents the
rst time the transaction is entered in the
formal accounting records? Step 7 AL
D
1
Diferentiated
Instruction
Logical-Mathematical
Learning Have students read the
Memorandum 1 explanation for Business
Transaction 1 (Digital Tranparency 6-7).
Ask: Which key words in the explanation
indicate that the account Cash in Bank
will be affected? contributed $25,000
from my personal savings Ask: Which
words signal that Crista Vargas, Capital
will be affected? for a deposit to the
business OL
D
2
Diferentiated
Instruction
English Learners Obtain copies
of source documents printed in other
languages. Have students point out the
similarities between those documents and
the ones illustrated in students textbooks.
As students identify similarities, use
different color markers to highlight the
same kind of information on different
source documents (e.g., date, customer
name, etc.). EL
D
1
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140 Chapter 6
6.
T ACCOUNTS
7.
JOURNAL ENTRY
Look again at the general journal entry shown above. Notice that in the
upper right-hand corner there is a line for the page number. Journal pages
are numbered in consecutive order; that is, 1, 2, 3, and so on. When you fill
one page with journal entries, go on to the next page. Be sure to properly
number each new page.
Cash in Bank
Debit
25,000
Credit
Crista Vargas, Capital

Debit
Credit
25,000
1. The accounts Office Equipment and Crista Vargas, Capital are
affected.
2. Office Equipment is an asset account. Crista Vargas, Capital is an
owners equity account.
3. Office Equipment is increased by $400. Crista Vargas, Capital is
increased by $400.
On October 2 Crista Vargas took two
telephones valued at $200 each from her home
and transferred them to the business as office
equipment, Memorandum 2.
6.
T ACCOUNTS
4. Increases in asset accounts are recorded as debits. Debit Office
Equipment for $400.
5. Increases in owners capital accounts are recorded as credits. Credit
Crista Vargas, Capital for $400.
ANALYSIS
Identify
Classify
/
DEBIT-CREDIT RULE
Office Equipment
Debit
400
Credit

Debit
Credit
400
1
2
3
4
1
2
3
4
POST.
REF.
1
20--
Oct.

Cash in Bank
Crista Vargas, Owners Equity
Memorandum 1
1

25 00000
25 00000
TO:
FROM:
DATE:
SUBJECT:
MEMORANDUM 2
I have contributed two telephones from my home to the business. The
phones are valued at $200 each. Total contribution $400.
Accounting Clerk
Crista Vargas
October 2, 20--
Contributed personal phones
155 Gateway Blvd.
SECTION 6.2
TEACH
C
1 Critical Thinking
Contrasting For Business
Transaction 1, have students trace
the information in the T accounts back
to the source document. Ask: Which
information is used for T-account
analysis? account debited and debit
amount; account credited and credit
amount Ask: Which information is
not used for the T-account analysis?
transaction date and description
Ask: Is the T account a part of the
accounting records? No, it is just a tool
used for analysis. AL
C
2 Critical Thinking
Applying Procedures Have students
examine the general journal entry for
Business Transaction 1. Ask: Why is
Cash in Bank recorded before Crista
Vargas, Capital? The debit part of the
entry is always recorded rst. BL
C
3 Critical Thinking
Separating Parts Refer students
to Business Transaction 2 (Digital
Tranparency 6-8) and explain that
the steps in the analysis model are not
written as formal accounting records.
They are simply tools to analyze
transactions. Ask: Why is it useful to
analyze business transactions before
entering them in the formal accounting
records? Debits and credits can be
entered into their correct accounts
without the chance of making mistakes
that would become part of the
permanent record. OL
Extended Skill Practice
Journalizing Transactions
Use Demonstration Problem
6-1 in Chapter 6 Fast File for
step-by-step practice recording an
owners additional investment in the
business. The problem also appears on
TeacherWorks Plus.
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3
Chapter 6 141
CHAPTER 6 ENRICHMENT RESOURCES
Concept Assessment
Chapter Quiz
Chapter Test
Presentation Plus!
PowerPoint
Presentations
glencoe.com
Online Learning Center
Info Trek
Show Me
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Interactive Glossary (English and Spanish)
Connect to Careers
ExtendA Matter of Ethics
Personal Finance Online
Self-Assessment Section Quizzes
Self-Assessment Chapter Quiz
7.
7.
JOURNAL ENTRY
1. The accounts Computer
Equipment and Cash in
Bank are affected.
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.
JOURNAL ENTRY
On October 4 Zip issued Check 101 for $3,000 to buy a
computer system.
6.
T ACCOUNTS
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.
ANALYSIS
Identify
Classify
/
DEBIT-CREDIT RULE
Computer Equipment
Debit
3,000
Credit
Cash in Bank
Debit
Credit
3,000
8
9
10
11
8
9
10
11
POST.
REF.
1
Computer Equipment
Cash in Bank
Check 101
4 3 000 00
3 000 00
5
6
7
5
6
7
POST.
REF.
1
Oct. Office Equipment
Memorandum 2
2 40000
40000
Dollars Cents
Add deposits
Total
Less this check
$
Date
To
For
20
25,000 00
25,000 00
3,000 00
22,000 00
No. 101
3,000.00
October 4 --
Info-Systems Inc.
computer
C
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SECTION 6.2
TEACH
C Critical Thinking
Making Inferences Have students
compare the journal entries in Business
Transactions 1 and 2. Ask: What do
you notice about the dates in these
transactions? The rst entry includes the
year; the second entry does not.
Ask: What does this tell you about
including the year in a general journal
entry? The year is written only for the rst
transaction recorded on each page. OL
R Reading Strategy
Predicting For Business Transaction 3
(Digital Tranparency 6-9), have students
cover everything except the rst sentence
with a sheet of paper. Ask: What item
was purchased? a computer Ask: What
accounts are affected by the purchase?
Computer Equipment, Cash in Bank Refer
students to the chart of accounts on p. 82
as needed. BL
WWriting Support
Expository Writing Ask students
to think of a time when something was
not communicated properly because
of hard-to-read writing. Ask: Why
is it important to work neatly when
journalizing transactions? Have students
write a paragraph about the importance
of writing clear journal entries. Responses
might describe how entries with unclear
numbers can cause errors that are carried
forward throughout the accounting
process. The journal entry is the rst place
that information is entered, and errors
made here will show up later. OL
142 Chapter 6
To separate the amounts to be paid to individual creditors, Zip uses a
different account name for each creditor. The account name consists of
Accounts Payable followed by the name of the creditor. You may have
to abbreviate the name to fit it on one line of the journal. An acceptable
abbreviation in the preceding journal entry is Accts. Pay.Coast to Coast
Auto.
Zip uses the same naming system for the amounts to be paid by
individual customers. The account name consists of Accounts Receivable
followed by the customers name.
1. The accounts Delivery Equipment and Accounts PayableCoast to
Coast Auto are affected.
2. Delivery Equipment is an asset account. Accounts PayableCoast to
Coast Auto is a liability account.
3. Delivery Equipment is increased by $12,000. Accounts Payable
Coast to Coast Auto is increased by $12,000.
7.
JOURNAL ENTRY
On October 9 Zip bought a used truck on
account from Coast to Coast Auto for $12,000,
Invoice 200.
6.
T ACCOUNTS
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
PayableCoast to Coast Auto for $12,000.
ANALYSIS
Identify
Classify
/
DEBIT-CREDIT RULE
Bus i nes s Tr ansac t i on 4

Debit
Credit
12,000

Accounts Payable
Coast to Coast Auto Delivery Equipment
Credit
Debit
12,000
11
12
13
14
11
12
13
14
POST.
REF.
1
Delivery Equipment
Accts. Pay.Coast to Coast Auto
Invoice 200
9 12 00000
12 00000
TO
DATE:
ORDER NO.:
SHIPPED BY:
TERMS:
INVOICE NO. 200
155 Gateway Blvd.
440 Lake Drive
1 Dodge Truck Used $ 12,000.00 $ 12,000.00
Oct. 9, 20--
99674
n/a
Installment
Coast to Coast Auto
SECTION 6.2
TEACH
C
1 Critical Thinking
Applying Procedures Have students
look at Business Transaction 4
(Digital Tranparency 6-10). Ask: How
would you know to debit an account
named Delivery Equipment instead of
an account named Truck or Delivery
Vehicle? by referring to the chart of
accounts Refer students to the chart of
accounts on p. 82. Ask: If Zip wrote a
check to repair a plumbing problem,
which account would be debited?
Maintenance Expense OL
C
2 Critical Thinking
Differentiating Have students list
three different accounts that could be
credited when a company acquires an
asset. A different asset such as Cash
in Bank, a liability such as Accounts
PayableCoast to Coast Auto, or the
owners capital account AL
C
3 Critical Thinking
Making Inferences Have students
explain why they think dollar signs are
not used on accounting stationery.
A sloppy dollar sign might be mistaken
for a number. Ask: What problem might
this cause? If a dollar sign is mistaken for
a number, it will cause an error in the
records. AL
step-by-step practice recording an asset
purchased on account. The problem also
appears on TeacherWorks Plus.
C
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C
2
C
3
Chapter 6 143
PROFESSIONAL
DEVELOPMENT
ELL: Direct Vocabulary Instruction
A teacher has students create
vocabulary cards to build a personal
dictionary.
1. The accounts
Accounts
Receivable
Green Company
and Office Equip ment are affected.
2. Both accounts are asset accounts.
3. Accounts ReceivableGreen Company is increased by $200. Office
Equipment is decreased by $200.
7.
JOURNAL ENTRY
On October 11 Zip sold one telephone on account
to Green Company for $200, Memorandum 3.
6.
T ACCOUNTS
4. Debit Accounts ReceivableGreen Company for $200.
5. Credit Office Equipment for $200.
ANALYSIS
Identify
Classify
/
DEBIT-CREDIT RULE
Office Equipment
Credit
200
Debit
Accounts Receivable
Green Company
Credit
Debit
200
14
15
16
17
14
15
16
17
POST.
REF.
1

Accts. Rec.Green Company
Office Equipment
Memorandum 3

11

200 00

20000
1. The accounts Accounts
PayableCoast to Coast Auto
and Cash in Bank are affected.
2. Accounts PayableCoast to
Coast Auto is a liability account.
Cash in Bank is an asset account.
3. Both accounts are decreased by $350.
On October 12 Zip mailed Check 102 for $350 as the first
installment on the truck purchased from Coast to Coast Auto on
October 9.
Identify
Classify
/
Busi ness Tr ans ac t i on 6
TO:
FROM:
DATE:
SUBJECT:
MEMORANDUM 3
Sold one telephone on account to Green Company for $200.
Accounting Clerk
Crista Vargas
October 11, 20--
Sold telephone
155 Gateway Blvd.
ANALYSIS
Dollars Cents
Add deposits
Total
Less this check
$
Date
To
For
20
22,000 00
22,000 00
350 00
21,650 00
No. 102
350.00
October 12 --
Coast to Coast Auto
installment on truck
C
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SECTION 6.2
TEACH
R

Reading Strategy
Reading Source Documents
Have students examine the source
document for Business Transaction 5
(Digital Tranparency 6-11). Ask: Which
words on the source document indicate
that Zip Delivery Service will receive
money for the telephone in the future?
on account BL
C

Critical Thinking
Drawing Conclusions Ask: How
does Zip Delivery Service earn revenue?
from selling delivery services Ask: Why is
the money from the sale of the telephone
not considered revenue for the business?
It is the sale of an asset. The sale of
assets is generally not a major source of
cash for a business because the business
uses its assets to generate revenue. AL
M Math Skill Practice
Calculating a Loan Term In
Business Transaction 6 (Digital
Tranparency 6-12), Zip makes the rst
payment on the truck. Ask: What is the
total number of payments required to
pay off the $12,000 purchase price of the
truck? 34 payments of $350 and a last
payment of $100 $12,000 OL
Journalizing Transactions Use
Demonstration Problem 6-3
in Chapter 6 Fast File for step-by-
step practice recording a payment on
account. The problem also appears on
TeacherWorks Plus.
144 Chapter 6
7.
JOURNAL ENTRY
6.
T ACCOUNTS
4. Debit Accounts PayableCoast to Coast Auto for $350.
5. Credit Cash in Bank for $350.
DEBIT-CREDIT RULE
Cash in Bank
Credit
350
Debit
Accounts Payable
Coast to Coast Auto
Credit
Debit
350
17
18
19
20
17
18
19
20
POST.
REF.
1
Accts. Pay.Coast to Coast Auto
Cash in Bank
Check 102

12

350 00

35000

1. The accounts Cash in Bank and Accounts ReceivableGreen
Company are affected.
2. Cash in Bank is an asset account. Accounts ReceivableGreen
Company is an asset account.
3. Cash in Bank is increased by $200. Accounts ReceivableGreen
Company is decreased by $200.
On October 14 Zip received and deposited a
check for $200 from Green Company, Receipt 1.
The check is full payment for the telephone sold on
account to Green on October 11.
6.
T ACCOUNTS
4. Debit Cash in Bank for $200.
5. Credit Accounts ReceivableGreen Company for $200.
ANALYSIS
Identify
Classify
/
DEBIT-CREDIT RULE
Busi ness Tr ans ac t i on 7
Accounts Receivable
Green Company
Credit
200
Debit
Cash in Bank
Credit
Debit
200
RECEIVED FROM $
DOLLARS
FOR
RECEIPT
RECEIVED BY
20 --
Green Company 200.00
Two hundred and
no
/100
Telephone
Crista Vargas
Oct. 14
No. 1
155 Gateway Blvd.
D
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SECTION 6.2
TEACH
D
1
Diferentiated
Instruction
Verbal-Linguistic Learning
Emphasize the spelling of receipt.
Give students a memory device to
help avoid transposing the i and e.
For example,
I before E except after C,
or pronounced A as in weight
or I as in height
Have students apply the memory device
to spell one or more of these words:
receivable, eight, Heisman, believe.
Explain that although this rule has some
exceptions (e.g., foreign), it is a good
general guideline. OL
Calculating Time Periods Have
students look at the source document
in Business Transaction 7 (Digital
Tranparency 6-13). Ask: For how many
days did Zip extend credit to Green
Company? (Hint: Look at the source
document for Business Transaction 5
on p. 144) 3 days OL
D
2
Diferentiated
Instruction
Visual-Spatial Learning Have
students contact a local business and
gather samples of source documents the
business uses in its daily operations. Then
have students display the various types
of source documents on a bulletin board.
Ask students to highlight the portions of
each source document that provide the
data for journal entries. OL
Journalizing Transactions Use
Demonstration Problem 6-4 in
Chapter 6 Fast File for step-by-
step practice recording a payment
received on account. The problem also
Chapter 6 145
PROFESSIONAL
DEVELOPMENT
Math: Multiple Approaches to
Problem Solving A teacher and
students discuss various options for
problem solving and then apply one,
working backwards, to a problem
situation.
7.
JOURNAL ENTRY
20
21
22
23
20
21
22
23
POST.
REF.
1
Cash in Bank
Accts. Rec.Green Company
Receipt 1
14 20000
20000
1. The accounts
Cash in Bank
and Delivery
Revenue are affected.
2. Cash in Bank is an asset account. Delivery Revenue is a revenue
account.
3. Cash in Bank is increased by $1,200. Delivery Revenue is increased
by $1,200.
7.
JOURNAL ENTRY
On October 15 Zip provided delivery services for
Sims Corporation. A check for $1,200 was received
in full payment, Receipt 2.
6.
T ACCOUNTS
4. Increases in asset accounts are recorded as debits. Debit Cash in Bank
for $1,200.
5. Increases in revenue accounts are recorded as credits. Credit Delivery
Revenue for $1,200.
ANALYSIS
Identify
Classify
/
DEBIT-CREDIT RULE
Credit
Debit
1,200
Cash in Bank
Credit
1,200
Debit
Delivery Revenue
23
24
25
26
23
24
25
26
POST.
REF.
1
Cash in Bank
Delivery Revenue
Receipt 2
15 1 20000
1 20000
RECEIVED FROM $
DOLLARS
FOR
RECEIPT
RECEIVED BY
20 --
Sims Corporation 1,200.00
One thousand two hundred and
no
/100
Delivery services
Crista Vargas
Oct. 15
No. 2
155 Gateway Blvd.
SECTION 6.2
TEACH
C Critical Thinking
Drawing Conclusions Point out
to students that Sims Corporation is a
customer. Ask: Why did Zip not issue an
invoice? because it is a cash transaction,
not a credit transaction BL
R Reading Strategy
Reading Source Documents Have
students examine Receipt 2
from Business Transaction 8 (Digital
Tranparency 6-14). Ask: Which key
words on the receipt indicate that the
transaction will affect Zips revenue
account? delivery services Ask: How
does revenue affect owners equity?
Revenue increases owners equity. OL
Reading Accounting Forms Have
students examine the amount columns in
the journal entry in Business Transaction
8. Ask: How do we know where the
commas and decimal points occur in a
number? Vertical lines and shading in
the form take the place of commas and
decimal points. OL
Flowcharts A owchart is a diagram that shows a step-by-step progression through a process. It
usually has connecting lines between steps. Have students develop a owchart that shows the steps
for completing a simple transaction such as a cash sale and recording the transaction in the general
journal. For example, when a customer purchases long-distance moving services, the customer
receives a receipt showing the dates, the details of the delivery, and the amount. The business keeps a
copy of the receipt. The receipt is the source document used to journalize the transaction.
EXTENDING THE CONTENT
C R
M
146 Chapter 6
1. The accounts Rent Expense
2. Rent Expense is an expense.
Cash in Bank is an asset.
3. Rent Expense is increased
by $700. Cash in Bank is
decreased by $700.
7.
JOURNAL ENTRY
On October 16 Zip mailed Check 103 for $700 to pay the
months rent.
6.
T ACCOUNTS
4. Increases in expense accounts are recorded as debits. Debit Rent
Expense for $700.
Bank for $700.
ANALYSIS
Identify
Classify
/
DEBIT-CREDIT RULE
Cash in Bank
Credit
700
Debit
Rent Expense
Credit
Debit
700
26
27
28
29
POST.
REF.
1

Rent Expense
Cash in Bank
Check 103

16

700 00

70000

1. The accounts
Advertising
Expense and Accounts PayableRockport Advertising are affected.
2. Advertising Expense is an expense account. Accounts Payable
Rockport Advertising is a liability account.
3. Advertising Expense is increased by $75. Accounts PayableRockport
Advertising is increased by $75.
On October 18 Rockport Advertising prepared an
advertisement for Zip. Zip will pay Rockports $75 fee
later, Invoice 129.
ANALYSIS
Identify
Classify
/
Bus i ness Tr ansac t i on 10
Dollars Cents
Add deposits 10/14
10/15
Total
Less this check
$
Date
To
For
20
21,650 00
200 00
1,200 00
23,050 00
700 00
22,350 00
No. 103
700.00
October 16 --
Tooley & Co. Management
rent
TO
DATE:
ORDER NO.:
SHIPPED BY:
TERMS:
INVOICE NO. 129
155 Gateway Blvd.
1 Print Ad $ 75.00 $ 75.00
Oct. 18, 20--
699
n/a
Payable in 30 days
Rockport Advertising
10200 Prairie Parkway
R
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KPO
R
T
Advertising
SECTION 6.2
TEACH
R Reading Strategy
Have students examine Business
Transaction 9 (Digital Tranparency
6-15). Ask: What type of source
document is used? a check stub Ask:
Which key word indicates that Zip is
paying an expense? Rent. Rent is an
operating expense. Ask: How does an
expense affect owners equity? Expenses
decrease owners equity. OL
Computing Dates Refer students to
Invoice 129 in Business Transaction 10
(Digital Tranparency 6-16). Ask: What is
the due date of this invoice? November 17
October 1831 13 days
November 117 17 days
13 days 17 days 30 days AL
C Critical Thinking
Differentiating Have students look
at the source document for Business
Transaction 10. Ask: Why is this
transaction represented by an invoice
rather than a check stub? The purchase
was on account rather than for cash. BL
Source Documents Ask students to collect source documents for business transactions in their daily
lives for a period of one week. Have students prepare journal entries from the documents they collect.
(Samples of source documents that students might collect include cash register receipts, handwritten
receipts, employee time cards, paycheck stubs, invoices, credit card receipts, and telephone bills.)
R
M
C
Chapter 6 147
7.
JOURNAL ENTRY
6. T ACCOUNTS
4. Increases in expense accounts are recorded as debits. Debit
Advertising Expense for $75.
5. Increases in liability accounts are recorded as credits. Credit Accounts
PayableRockport Advertising for $75.
DEBIT-CREDIT RULE
Advertising Expense
Credit
Debit
75
Accounts Payable
Rockport Advertising
Credit
75
Debit

29
30
31
32
29
30
31
32
POST.
REF.
1
Advertising Expense
Accts. Pay.Rockport Adv.
Invoice 129
18 7500
7500
1. The accounts Accounts ReceivableCity News and Delivery Revenue
are affected.
2. Accounts ReceivableCity News is an asset account. Delivery
Revenue is a revenue account.
3. Accounts ReceivableCity News is increased by $1,450. Delivery
Revenue is increased by $1,450.
On October 20 Zip provided delivery services for
a customer, City News. Zip billed City News $1,450,
Sales Invoice 1.
6.
T ACCOUNTS
4. Increases in asset accounts are recorded as debits. Debit Accounts
ReceivableCity News for $1,450.
5. Increases in revenue accounts are recorded as credits. Credit Delivery
Revenue for $1,450.
ANALYSIS
Identify
Classify
/
DEBIT-CREDIT RULE
Delivery Revenue
Credit
1,450
Debit
Accounts ReceivableCity News

Credit
Debit
1,450
TO
DATE:
ORDER NO.:
SHIPPED BY:
TERMS:
City News
10900 Main St.
1 Delivery Services $ 1,450.00 $ 1,450.00
Oct. 20, 20--
300
n/a
Payable in 30 days
SALES INVOICE NO. 1 Zip Delivery Service
155 Gateway Blvd.
SECTION 6.2
TEACH
C Critical Thinking
Drawing Conclusions Refer
students to the journal entry in part 7
of Business Transaction 10 (Digital
Tranparency 6-16) at the top of the
page. Ask: Why is Invoice 129 entered?
It refers to the source document for
this transaction, which is Invoice 129. If
more information about the transaction
is needed or questions about it should
arise, that invoice provides the detailed
documentation. OL
R Reading Strategy
Comparing-Contrasting Have
students examine the invoice in Business
Transaction 11 (Digital Tranparency
6-17) and contrast it with the one in
Business Transaction 10. Ask: What
determines whether an invoice is a sales
invoice or a purchase invoice? It depends
on whether you are the seller or the
buyer. To the seller, it is a sales invoice; to
the buyer, a purchase invoice. OL
WWriting Support
Writing Clearly Have students write
a short paragraph describing how to
journalize Business Transaction 11.
Students paragraphs should detail
the systematic process of transferring
information from the source document to
the journal. OL
step-by-step practice recording a revenue
transaction on account. The problem also
C
R
W
148 Chapter 6
1. The accounts Utilities Expense
2. Utilities Expense is an expense
account. Cash in Bank is an asset
account.
3. Utilities Expense is increased by
$125. Cash in Bank is decreased
by $125.
7.
32
33
34
35
32
33
34
35
POST.
REF.
1

Accts. Rec.City News
Delivery Revenue
Sales Invoice 1

20

1 450 00

1 45000

JOURNAL ENTRY
7.
JOURNAL ENTRY
On October 28 Zip paid a $125 telephone bill with Check 104.
6.
4. Increases in expense accounts are recorded as debits. Debit Utilities
Expense for $125.
Bank for $125.
DEBIT-CREDIT RULE
Utilities Expense
Credit
Debit
125
Cash in Bank
Credit
125
Debit

35
36
37
38
35
36
37
38
POST.
REF.
1

Utilities Expense
Cash in Bank
Check 104

28

125 00

12500

Identify
Classify
/
Bus i ness Tr ansac t i on 12
T ACCOUNTS
ANALYSIS
Dollars Cents
Add deposits
Total
Less this check
$
Date
To
For
20
22,350 00
22,350 00
125 00
22,225 00
No. 104
125.00
October 28 --
Pacific Bell Telephone
telephone bill
SECTION 6.2
TEACH
C
1 Critical Thinking
Applying GAAP Have students
examine the journal entry in Business
Transaction 11. Point out that
Roadrunner records the revenue even
though the customer has not yet paid
for the delivery service. Ask: Which
GAAP principle requires this? revenue
recognition, discussed in Chapter 5 AL
C
2 Critical Thinking
Differentiating Refer students
to Business Transaction 12 (Digital
Tranparency 6-18). Ask: The telephone
bill is an expense, but the telephone is
an asset. Why? The telephone is property
owned by the business. The telephone
bill is for something consumed by the
business during the accounting period.
AL
C
3 Critical Thinking
Drawing Conclusions Draw the
students attention to the line numbers
that appear on both sides of a general
journal page (Lines 3235 in the general
journal at the top of this page and Lines
3538 at the bottom of this page). Ask:
What is the purpose of these numbers? to
provide reference points for each line so
that it is easier to make entries Ask: Do
you skip a line between journal entries?
No. Although Line 35 appears blank in
the rst journal entry, it is used for the
second journal entry. OL
Interviewing Employers Encourage students who have part-time jobs to interview their employers
regarding how the business keeps track of business transactions. Ask students to obtain samples
of blank general journal pages or input forms and computer-generated reports, if possible. Have
students share their ndings with the class. Students should be able to list the names of the computer
applications and describe their use.
PROFESSIONAL
DEVELOPMENT
Reading: Bridging Cultural Gaps A
teacher models the use of context
clues.
C
1
C
2
C
3
Chapter 6 149
1. The accounts Maintenance
Expense and Cash in Bank are
affected.
2. Maintenance Expense is an
expense account. Cash in Bank
is an asset account.
3. Maintenance Expense is
increased by $600. Cash in Bank is decreased by $600.
7.
JOURNAL ENTRY
On October 29 Zip wrote Check 105 for $600 to have the office
repainted.
6.
T ACCOUNTS
4. Increases in expense accounts are recorded as debits. Debit
Maintenance Expense for $600.
Bank for $600.
ANALYSIS
Identify
Classify
/
DEBIT-CREDIT RULE
Maintenance Expense
Credit
Debit
600
Cash in Bank
Credit
600
Debit

38
39
40
41
38
39
40
41
POST.
REF.
1
Maintenance Expense
Cash in Bank
Check 105
29 600 00
600 00
1. The accounts Crista Vargas,
Withdrawals and Cash in Bank
are affected.
2. Crista Vargas, Withdrawals is an
owners equity account. Cash in
Bank is an asset account.
3. Crista Vargas, Withdrawals is
increased by $500. Cash in Bank is decreased by $500.
On October 31 Crista Vargas wrote Check 106 to withdraw $500
cash for personal use.
ANALYSIS
Identify
Classify
/
Dollars Cents
Add deposits
Total
Less this check
$
Date
To
For
20
22,225 00
22,225 00
600 00
21,625 00
No. 105
600.00
October 29 --
Rainbow Painting
office painted
Dollars Cents
Add deposits
Total
Less this check
$
Date
To
For
20
21,625 00
21,625 00
500 00
21,125 00
No. 106
500.00
October 31 --
Crista Vargas
withdrawal
SECTION 6.2
TEACH
WWriting Support
Persuasive Writing Refer
students to Business Transaction 13
(Digital Tranparency 6-19). Painting the
ofce is an expense that is not directly
related to this companys source of
revenue (delivery services). Ask students
to think about whether this is a necessary
expense. Have students write a paragraph
stating and defending their opinion.
Responses may include: yes, because
the ofce should have a professional
appearance; no, because customers dont
come to the ofce. OL
Calculating Amounts Remind
students that in Business Transaction 1
(Digital Tranparency 6-7), the owner
deposited $25,000 cash into the business
checking account. Have students look at
the Balance carried forward on Check
Stub 105. Ask: How much money has
Zip spent so far? $25,000 $21,625
$3,375 OL
R Reading Strategy
Tell students to examine the source
document for Business Transaction
14 (Digital Tranparency 6-20). Ask:
What is the key word that identies this
transaction? withdrawal Ask: What
effect does a withdrawal have on owners
equity? A withdrawal decreases owners
equity. OL
Costs The term cost means the amount charged or paid for
something. A cost can be for an asset or for an expense. Draw a
diagram with headings for COSTS, Assets, and Expenses.
Have students review Zips costs and determine which are
assets and which are expenses. Write the transaction number
and description in the appropriate column. Note: Transaction 6
reduced a liability, and 14 was a withdrawal. Neither are costs.
COSTS
Assets Expenses
3. computer 9. rent
4. truck 10. advertising
12. phone bill
13. maintenance
PROFESSIONAL
DEVELOPMENT
ELL: Language Practice Students of
varying language prociencies work
together to review the content they
have just read.
W
M
R
150 Chapter 6
7.
JOURNAL ENTRY
6.
T ACCOUNTS
4. Increases in the owners withdrawals account are recorded as debits.
Debit Crista Vargas, Withdrawals for $500.
Bank for $500.
DEBIT-CREDIT RULE
Crista Vargas, Withdrawals
Credit
Debit
500
Cash in Bank
Credit
500
Debit

41
42
43
44
41
42
43
44
POST.
REF.
1
Crista Vargas, Withdrawals
Cash in Bank
Check 106
31 50000
50000
Correcting the General Journal
How Do You Correct Errors in the General Journal?
Occasionally, errors occur when journalizing transactions. When an
error is discovered, it must be corrected.
In a manual system, an error should never be erased. An erasure looks
suspicious. It might be seen as an attempt to cover up a mistake or, worse,
to change the accounting records illegally. To correct errors, use a pen and
a ruler to draw a horizontal line through the entire incorrect item and write
the correct information above the crossed-out error. A correction for an
erroneous amount is shown in the general journal as follows:
1
2
3
4
1
2
3
4
POST.
REF.
0 0 0 00 52
1
20--
Oct.
52 0 0 0 00
25 0 0 0 00
25 0 0 0 00
Cash in Bank
Memorandum 1
1
1
2
3
4
1
2
3
4
POST.
REF.
0 0 0 00 25
1
20--
Oct.

25 0 0 0 00

Cash in Bank
Delivery Revenue
Memorandum 1

1

To correct for an erroneous account name, cross out the incorrect infor-
mation and write the correct account name above.
Writing too large When
entering data in the general
journal, be sure not to write
too large. You will leave little
space to write in correct
data if you have to cross
out incorrect information.
Account titles and amounts
should be written no larger
the
3

__

4
of the line space.
Common
Mistakes
SECTION 6.2
TEACH
C Critical Thinking
Making Inferences Point out
to students that using a pencil for
accounting exercises is different from how
information is recorded in the business
world. Ask: What methods are used in
the real world to record transactions?
computers or ink on paper Ask: Why is
it not acceptable to use a pencil? Pencil
entries can be erased. OL
R Reading Strategy
Reading Accounting Forms
Ask: What amount was originally
recorded? 52,000.00 Ask: Why is it
crossed out? It is the wrong amount.
Ask: What is the correct amount?
25,000.00 BL
WWriting Support
Writing Clearly Write the denition
of audit trail on the chalkboard: a chain
of references that makes it possible to
trace information and locate errors. Have
students write a paragraph describing
the audit trail for the second corrected
journal entry shown on this page. Students
should discuss how the source document
reference in the Description column
Memorandum 1 is the rst step in the
audit trail. AL
Common Mistakes
Remind students that any
hand-written financial data
must be legible in order to be understood
by other employees who need to
review it.
C
R
W
Chapter 6 151
SECTION 6.2
ASSESS
SECTION 6.2 ASSESSMENT RESOURCES
Use these resources to assess mastery of
section content.
Chapter Study Guides and Working
Papers (Problems 6-2, 6-3)
Presentation Plus!
glencoe.com
Online Learning Center: Click
on Student Center. Click on
Self-Assessment Quizzes and
select Chapter 6.
SECTION 6.2 ASSESSMENT ANSWERS
Answers will include different
transactions (e.g., receiving income,
paying cash for an expense, etc.).
First line: details of date, account debited,
and debit amount
Second line: details of account credited
and credit amount
Third line: detail of source document
reference or other explanation
Math for Accounting
1. Computer Equipment, 2,400.00
2. Accounts PayableTech World, 2,400.00
PROBLEM 62
Step 1 D Step 4 B
Step 2 F Step 5 A
Step 3 E Step 6 C
PROBLEM 63
1. Passenger Van, asset, inc., dr.; Cash in
Bank, asset, dec., cr.
2. Utilities Expense, expense, inc., dr.;
Cash in Bank, asset, dec., cr.
3. Cash in Bank, asset, inc., dr.;
Day Care Fees, revenue, inc., cr.
CLOSE
Synthesizing Write this transaction
on the chalkboard: On October 31 Zip
bought oil from Ace Energy for $32.40
cash, Receipt 4. Have students journalize
this transaction.
SECTI ON 6.2
Q
U
I
Z
1. What kind of transactions can go in the general journal? any kind
2. In a general journal entry, what do you write rst? date
3. What do you write next? account debited and debit amount
4. What do you write next? account credited and credit amount
5. What do you write last? source document reference or explanation
SECTI ON 6 2
Business
Transaction
First Line of General
Journal Entry
Second Line of General
Journal Entry
Third Line of General
Journal Entry
After You Read
PROBLEM 62 Recording Business
Transactions
INSTRUCTIONS The six steps for recording a business transaction in the
general journal are shown below, out of order. In your working papers or
on a blank sheet of paper, indicate the proper order of these steps.
A. Amount of the credit D. Date of the transaction
B. Name of the account credited E. Amount of the debit
C. Source document reference F. Name of the account debited
PROBLEM 63 Analyzing Transactions
Glenda Hohn recently started a day-care center. She uses the following
accounts.
General Ledger
Cash in Bank Glenda Hohn, Capital
Accts. Rec.Tiny Tots Nursery Glenda Hohn, Withdrawals
Office Furniture Day-Care Fees
Passenger Van Utilities Expense
Accts. Pay.Acme Bus Service Van Expense
INSTRUCTIONS In your working papers or on a separate sheet of paper,
for each transaction: Determine which accounts are affected. Classify
each account. Determine whether the accounts are being increased
or decreased. Indicate which account is debited and which account is
credited.
TRANSACTIONS
1. Bought a passenger van for cash.
2. Paid the telephone bill for the month.
3. Received cash from customers for day-care services.
Math for
Accounting
Hania Dance Company
bought a computer
system on account
from Tech World. The
regular price for the
system is $3,000, but
Tech World reduced the
price by 20 percent for a
storewide sale. Answer
the following questions
about the journal entry
for this transaction.
1. Which account is
debited and for
what amount?
2. Which account is
credited and for
what amount?
Think of three different types of
business transactions you might
have in the next month. Use a
table similar to this one to
describe the general journal
entry for each transaction.
SECTION 6.2 ASSESSMENT
152 Chapter 6
POST.
REF.
5 2 000
5 2 000
Nov 2
20__
Ofce Equipment
Maintenance Expense
Cash in Bank
Check 110
POST.
REF.
Step 1: Write in the date of the transaction
Step 2: Write in the account to debit
Step 6: Write in the source document reference
Step 4: Write in the account to credit Step 5: Write in the credit amount
Step 3: Write in the debit amount
Step 1
Step 2
Step 3
Collect and verify source documents
Analyze each transaction
Journalize each transaction
ACCOUNT
DEBIT CREDIT
ACCOUNT
DEBIT CREDIT
INVOICE
RECEIPT
MEMORANDUM
GENERAL
JOURNAL
CHAPTER 6 VISUAL SUMMARY
C
o
n
c
e
p
t
s
A
n
a
l
y
s
i
s
P
r
o
c
e
d
u
r
e
s
glencoe.com Download the vocabulary review, i-Summary, and i-Quiz for Chapter 6. mm D
Explain the f irst three steps in the accounting cycle.
Describe the steps to make a general journal entry.
Correct errors in general journal entries
Chapter 6 Visual Summary 153
CHAPTER 6
Visual Summary
After students have looked at the Visual
Summary, challenge them to create their
own diagrams of the Concepts section.
Tell them these diagrams could be used
to help them remember the steps for
completing the first three steps of the
accounting cycle. Choose several to
discuss and share with the class.
English Language
Learners
Students whose primary language is not
English might benefit from extra review
or tutoring at this point. You might
encourage them to write an example of
a corrected journal entry on an index
card to use as reference. Pair ELLs
with students who are fluent in English
to review the Procedures part of the
Summary. Provide more examples of
journal entries that need corrections for
the pairs to work through together.
Student Edition
Reading Check, p. 137
Section Assessments 1, 2: pp. 138, 152
Review and Activities, 154
Standardized Test Practice, p. 155
Real-World Applications and Connections,
pp. 162163
Teacher Edition
Section Quizzes 1, 2: pp. 138, 152
(on TeacherWorks Plus)
Concept Assessment
Quick Quiz
Chapter Quiz
Chapter Test
Performance Task Assessment List
Rubric
ExamView Test Generator
Connect Assignment Builder
CHAPTER 6 ASSESSMENT RESOURCES Use these resources to review, assess, or reteach the chapter.
Chapter 6 153
After You Read
CHAPTER 6 REVIEW AND ACTIVITIES
1. How do businesses keep permanent records of transactions? Good record keeping in the form of
journals make financial information readily available. Why might a business need to refer to a journal
entry about a transaction?
Answering the Essential Question
Vocabulary Check
2. Content Vocabulary Arrange the vocabulary terms below into categoriesgroups of related words.
Explain why you put the words together.
accounting cycle (p.135)
source document (p.136)
invoice (p.136)
receipt (p.136)
memorandum (p.136)
check stub (p.136)
journal (p.137)
journalizing (p.137)
fiscal year (p.137)
calendar year (p.137)
general journal (p.139)
3. Academic Vocabulary Use a dictionary to fill in the blanks below. Write a sentence for each word as it
is defined by the filled-in statement.
Occur (p.136) is a verb that means .
Affect (p.140) is a verb that means .
Affect is a noun that means .
Manual (p.151) is an adjective that means .
Manual is a noun that means .
Concept Check
4. Evaluate List the first three steps of the accounting cycle. What would happen if you skipped Step 2?
5. Describe four source documents. Be sure to include how and when each is used.
6. Analyze Why is a journal sometimes called the book of first entry?
7. How do you determine the debit and credit parts of a journal entry?
8. Listin the order they are recordedthe six types of information needed in a general journal entry.
9. Analyze Describe the relationship between the amounts entered in both columns of the general
journal. Why must the amounts have this relationship?
10. What procedure is used to correct a general journal entry error in a manual system?
12. Youve been chosen as the local Business
Owner of the Year. Write a one-page press
release describing your business and why
youve been successful. Be sure to include
the skills you use in running your business,
and how you plan to continue being
successful in the future.
NCTE 4 Use common written language to communicate effectively.
Math
11. On Sunday, Dawsons flower shop sold 25
arrangements. The materials needed for
25 arrangements cost $250. If he sold each
arrangement for $55, what was the net
income?
NCTM Problem Solving Solve problems that arise in
mathematics and in other contexts.
154 Chapter 6 Review and Activities
CHAPTER 6
Review and Activities
After You Read
Answering the Essential Question
1. The intent of this essential question
is to help students use inquiry to
arrive at an understanding of the
basic role of accounting. Once they
see the importance of effective
record-keeping they can generalize
and broaden their understanding of
nancial data.
Vocabulary Check
2. See the glossaries for denitions of
these terms. Have students share and
discuss their denitions.
3. Students answers should accurately
reect the dictionary denitions of
the Academic Vocabulary terms.
Concept Check
4. Step 1: Collect and verify source
documents; Step 2: analyze each
transaction; Step 3: journalize each
transaction. You could not do Step
3 because you would not have the
debit and credit parts.
5. Invoice: date; quantity, description,
cost of each item; terms of payment;
Receipt: date, person or business
paying, amount; Memorandum: date,
description of a transaction within
a business, amount; Check stub:
date, person or business receiving
payment, amount, checking account
balance
6. It is where transactions are rst
entered in the accounting records.
7. Analyze the transaction.
8. Date, account debited, debit amount,
account credited, credit amount,
source document reference or
explanation
10. Draw a line through the error; write the correct
information above the crossed-out error.
Math
11. To calculate net income, subtract overhead
costs from gross income. In this case, overhead
is $250 to purchase owers. Gross prot is the
total amount of money taken in by a business.
1. Multiply the number of arrangements sold
by the retail cost of each arrangement to get
the gross prot.
2. Subtract overhead from gross prot to
calculate the net income.
Gross prot $1,375 ($55 25 $1375), Net
prot $1125 ($1375 $250 $1,125)
12. Press releases will vary, but should reect
students thoughts on how a business might
become successful.
154 Chapter 6 154 Chapter 6
CHAPTER 6 STANDARDIZED TEST PRACTICE
Multiple Choice
1. Which is the purpose of a source document?
a. To describe a transaction that takes place within a business
b. To supply the information for journalizing a transaction
c. To serve as evidence of a transaction
d. All of these
2. A fiscal year is an accounting period
a. that begins on January 1 and ends on December 31.
b. of any length other than 12 months.
c. of 12 months which begins in the month the business chooses.
d. that may be for any designated length of time.
3. Which is the correct journal entry for the following transaction: A business buys $300 of office supplies on
account from A1 Office Supply on March 13?
a. 3/13 Office Supplies $300.00
A1 Office Supply $300.00
b. 3/13 A1 Office Supply $300.00
Office Supplies $300.00
c. 3/13 Cash $300.00
Office Supplies $300.00
d. 3/13 Office Supplies $300.00
Accts. Pay. A1 Office Supply $300.00
True or False
4. The general journal is a record of all the transactions that occur for a single accounting period.
Short Answer
5. Explain why it is important not to use an eraser when correcting entries in the general journal.
Chapter 6 Standardized Test Practice 155
Standardized Test
Practice
Multiple Choice
1. d
2. c
3. d
True or False
4. False
Short Answer
5. Erasures in the general journal are not
permitted because they can be seen
as an attempt to cover up a mistake
or to change the accounting records
illegally.
CHAPTER 6
Chapter 6 155
CHAPTER 6 COMPUTERIZED ACCOUNTING
For detailed instructions, see your Glencoe Accounting Chapter Study Guides and Working Papers.
QuickBooks

Q How do I enter general journal entries in
QuickBooks?
A From the Company menu, select Make
General Journal Entries.
Enter the date of the transaction.
Enter the account to be debited.
Enter the debit amount, source document
reference, and description.
Enter the account to be credited.
Enter the credit amount, source document
reference, and description.
Click Save & Close.
Q How do I enter general journal entries in
Peachtree?
A From the Tasks menu, select General
Journal Entry.
Enter the date of the transaction.
Enter the source document reference.
Enter the account number to be debited.
Enter a brief description of the transaction.
Enter the debit amount.
Enter the account number to be credited.
Enter the credit amount.
Click Save.
Recording General Journal Entries
Making the Transition from a Manual to a Computerized System
MANUAL METHODS COMPUTERIZED METHODS
Analyze the source document to determine which
accounts are affected.
Analyze the source document to de termine which
accounts are affected.
Using a general journal form, enter the details of the
transaction.
Enter the transaction details in the general journal
using the account numbers for each ledger
account.
Check for equality of debits and credits. The software will calculate the equality of debits
and credits.
i h
156 Chapter 6 Computerized Accounting
Computerized
Accounting
Peachtree automatically checks that the
debits in your journal entry are equal
to the credits. If the debits and credits
are in balance, Peachtree will record the
transaction. If they are not in balance,
Peachtree will display a message notifying
you that the transaction cannot be posted
because it is not in balance.
QuickBooks

QuickBooks automatically checks that the
debits in your journal entry are equal to
the credits. If the debits and credits are
in balance, QuickBooks will record the
transaction. If they are not in balance,
QuickBooks will display a message
notifying you that the transaction is not
in balance and that the total amount in
the Debit column needs to equal the total
amount in the Credit column.
CHAPTER 6
156 Chapter 6
CHAPTER 6 PROBLEMS
PROBLEM 64 Recording General Journal
Transactions
Ronald Hicks owns and operates Wilderness Rentals. The following
accounts are needed to journalize the months transactions.
General Ledger
101 Cash in Bank 301 Ronald Hicks, Capital
105 Accts. Rec.Helen Katz 305 Ronald Hicks, Withdrawals
110 Accts. Rec.Polk and Co. 310 Income Summary
120 Office Equipment 401 Equipment Rental Revenue
125 Camping Equipment 501 Advertising Expense
201 Accts. Pay.Adventure 505 Maintenance Expense
Equipment Inc. 515 Rent Expense
203 Accts. Pay.Digital Tech 520 Salaries Expense
Computers 525 Utilities Expense
205 Accts. Pay.Greg Mollaro
INSTRUCTIONS Record the following transactions on page 1 of the general
journal in your working papers. For each transaction:
1. Enter the date. Use the current year.
2. Enter the name of the account debited.
3. Enter the amount of the debit.
4. Enter the name of the account credited.
5. Enter the amount of the credit.
6. Enter a source document reference.
Date Transactions
Jan. 1
3
5
7
11
12
14
16
25
30
Wrote Check 310 for the part-time secretarys salary, $270.
Bought $2,000 of camping equipment on account from
Adventure Equipment Inc., Invoice 320.
Received $500 from a client for equipment rental, Receipt 150.
Wrote Check 311 to pay the electricity bill of $110.
Billed a client, Polk and Co., $1,700 for rental equipment, Sales
Invoice 262.
Ronald Hicks withdrew $800 for personal use, Check 312.
Bought a $300 scanner for the office computer from Digital
Tech Computers, on account, Invoice 270.
Wrote Check 313 for $1,000 as an installment payment toward
the amount owed to Adventure Equipment Inc.
Received $1,700 from Polk and Co. in payment on their
account, Receipt 151.
Paid Digital Tech Computers $300 for the amount owed,
Check 314.
StepbyStep Instructions:
Problem 64
1. Select the problem set
for Wilderness Rentals
(Prob. 64).
2. Rename the company and
set the system date.
3. Enter all of the general
journal transactions using
the General Journal Entry
option in the Tasks menu.
4. Print a General Journal
report.
5. Proof your work and make
any needed corrections.
6. Complete the Analyze
activity.
7. End the session.
SMART GUIDE
Problem 64
1. Restore the Problem
6-4.QBB file.
the Make General Journal
Entries option in the
Company menu.
3. Print a Journal report.
activity.
6. Back up your work.
PROBLEM GUIDE
PROBLEMS CAN BE SOLVED USING:
Manual Methods
McGraw-Hill Connect
Manual Glencoe
Working Papers
Computerized Methods
Peachtree
QuickBooks
Spreadsheet
QuickBooks

Calculate the amount of cash deducted from the Cash in
Bank account in January.
Analyze
Chapter 6 Problems 157
CHAPTER 6
PROBLEM 64
Recording General Journal
Transactions
Jan. 1: Dr. Salaries Exp. $270; Cr. Cash in
Bank $270; Check 310
Jan. 3: Dr. Camping Equip. $2,000;
Cr. Accts. Pay.Adventure Equip. Inc.
$2,000; Invoice 320
Jan. 5: Dr. Cash in Bank $500; Cr. Equip.
Rental Revenue $500; Receipt 150
Jan. 7: Dr. Utilities Exp. $110; Cr. Cash in
Jan. 11: Dr. Accts. Rec.Polk and Co.
$1,700; Cr. Equip. Rental Revenue
$1,700; Invoice 262
Jan. 12: Dr. Ronald Hicks, Withdrawals
$800; Cr. Cash in Bank $800;
Check 312
Jan. 14: Dr. Ofce Equip. $300; Cr. Accts.
Pay.Digital Tech Computers
$300; Invoice 270
Jan. 16: Dr. Accts. Pay.Adventure Equip.
Inc. $1,000; Cr. Cash in Bank $1,000;
Check 313
Jan. 25: Dr. Cash in Bank $1,700;
Cr. Accts. Rec.Polk and Co. $1,700;
Receipt 151
Jan. 30: Dr. Accts. Pay.Digital Tech
Computers $300; Cr. Cash in Bank
$300; Check 314
Jan. 1: $270
Jan. 7: 110
Jan. 12: 800
Jan. 16: 1,000
Jan. 30: 300
Total: $ 2,480
Analyze
PROBLEMS CAN BE SOLVED USING:
Manual Methods
McGraw-Hill Connect
Manual Glencoe
Working Papers
Computerized Methods
Peachtree
QuickBooks
Spreadsheet
Chapter 6 157
Transactions
Regina Delgado owns a business called Hot Suds Car Wash. She uses the
following chart of accounts.
General Ledger
101 Cash in Bank 401 Wash Revenue
105 Accts. Rec.Linda Brown 405 Wax Revenue
110 Accts. Rec.Valley Auto 410 Interior Detailing Revenue
125 Office Equipment 501 Advertising Expense
130 Office Furniture 505 Equipment Rental Expense
135 Car Wash Equipment 510 Maintenance Expense
201 Accts. Pay.Allen 520 Rent Expense
Vacuum Systems 525 Salaries Expense
205 Accts. Pay.OBrians 530 Utilities Expense
Office Supply
301 Regina Delgado, Capital
305 Regina Delgado, Withdrawals
310 Income Summary
INSTRUCTIONS Record the following transactions on page 1 of the
general journal in your working papers.
Date Transactions
Jan. 1
5
8
10
13
17
18
20
22
24
26
30
Regina Delgado invested $12,000 in the business,
Memorandum 41.
Purchased $5,000 in desks, chairs, and cabinets from OBrians
Office Supply on account, Invoice 1632.
Deposited $1,600 for income received from car washes for the
week, Receipt 101.
Paid the Village Bulletin $75 for running an ad, Check 301.
Regina Delgado withdrew $900 for personal use, Check 302.
Billed Valley Auto $400 for interior detailing, Sales Invoice 102.
Paid OBrians Office Supply $2,500 as an installment payment
on account, Check 303.
Regina Delgado transferred to the business an electronic
calculator valued at $350, Memorandum 42.
Wrote Check 304 for $600 to Shadyside Realty for the office rent.
Purchased $1,500 in car wash equipment from Allen Vacuum
Systems on account, Invoice 312.
Received a $400 check from Valley Auto in full payment of its
Issued Check 305 for $2,500 to OBrians Office Supply for the
balance due on account.
Identify the revenue account that was not used in the month
of January.
Analyze
Problem 65
for Hot Suds Car Wash
(Prob. 65).
option in the Tasks menu.
report.
activity.
7. End the session.
TIP: You can use General
Ledger Navigation Aid as an
alternative way to access
window.
SMART GUIDE
Problem 65
1. Restore the Problem
6-5.QBB file.
the Make General Journal
Entries option in the
Company menu.
3. Print a Journal report.
activity.
6. Back up your work.
PROBLEM GUIDE
QuickBooks

CHAPTER 6 PROBLEMS
158 Chapter 6 Problems
CHAPTER 6
PROBLEM 65
Transactions
Jan. 1: Dr. Cash in Bank $12,000; Cr.
Regina Delgado, Capital $12,000;
Memo. 41
Jan. 5: Dr. Ofce Furn. $5,000; Cr. Accts.
Pay.OBrians Ofce Supply $5,000;
Invoice 1632
Jan. 8: Dr. Cash in Bank $1,600; Cr. Wash
Revenue $1,600; Receipt 101
Jan. 10: Dr. Advertising Exp. $75; Cr. Cash
in Bank $75; Check 301
Jan. 13: Dr. Regina Delgado, Withdrawals
$900; Cr. Cash in Bank $900; Check
302
Jan. 17: Dr. Accts. Rec.Valley Auto $400;
Cr. Interior Detailing Revenue $400;
Invoice 102
Jan. 18: Dr. Accts. Pay.OBrians Ofce
Supply $2,500; Cr. Cash in Bank
$2,500; Check 303
Jan. 20: Dr. Ofce Equip. $350; Cr. Regina
Delgado, Capital $350; Memo. 42
Jan. 22: Dr. Rent Exp. $600; Cr. Cash in
Jan. 24: Dr. Car Wash Equip. $1,500; Cr.
Accts. Pay.Allen Vacuum Systems
$1,500; Invoice 312
Jan. 26: Dr. Cash in Bank $400; Cr. Accts.
Rec.Valley Auto $400; Receipt 102
Jan. 30: Dr. Accts. Pay.OBrians Ofce
$2,500; Check 305
The Wax Revenue account was not used.
Students can find this by comparing the
recorded transactions to the chart of
accounts for Problem 6-5.
Analyze
158 Chapter 6
Transactions
Abe Shultz owns and operates a pet grooming business called Kits & Pups
Grooming. The following accounts are used to journalize transactions.
General Ledger
101 Cash in Bank 207 Accts. Pay.Pet Gourmet
105 Accts. Rec.Juan Alvarez 301 Abe Shultz, Capital
110 Accts. Rec.N. Carlsbad 305 Abe Shultz, Withdrawals
115 Accts. Rec.Martha Giles 310 Income Summary
125 Office Equipment 401 Boarding Revenue
130 Office Furniture 405 Grooming Revenue
135 Computer Equipment 501 Advertising Expense
140 Grooming Equipment 505 Equipment Repair Expense
145 Kennel Equipment 510 Maintenance Expense
201 Accts. Pay.Able Store 520 Rent Expense
Equipment 525 Salaries Expense
205 Accts. Pay.Dogs & 530 Utilities Expense
Cats Inc.
Date Transactions
Jan. 1
3
5
9
11
14
16
18
23
28
31
Received $125 for boarding a clients dog for one week,
Receipt 300.
Abe Shultz contributed to the business a computer valued at
$2,500, Memorandum 33.
Billed a client, Juan Alvarez, $80 for grooming his pets, Sales
Invoice 212.
Wrote Check 411 to Allegheny Power Co. for $150 in payment
for the months electricity bill.
Abe Shultz withdrew $700 for personal use, Check 412.
Purchased kennel equipment for $2,600 from Dogs & Cats Inc.,
on account, Invoice DC92.
Paid the part-time receptionists salary of $400 by issuing Check 413.
Abe Shultz took from the business for his personal use a ten-key
adding machine valued at $65, Memorandum 34.
Juan Alvarez sent a check for $80 in full payment of his
Purchased on credit $250 in grooming equipment from the Pet
Gourmet, Invoice PG333.
Issued Check 414 for $1,300 as an installment payment for the
amount owed to Dogs & Cats Inc.
Calculate the total of the Accounts Receivable accounts as of
January 31.
Analyze
Problem 66
for Kits & Pups Grooming
(Prob. 66).
journal transactions.
report.
activity.
7. End the session.
TIP: As a shortcut, you can
enter just the day of the
month for a transaction date.
SMART GUIDE
CHAPTER 6
PROBLEM 66
Transactions
Jan. 1: Dr. Cash in Bank $125;
Cr. Boarding Revenue $125;
Receipt 300
Jan. 3: Dr. Computer Equip. $2,500;
Cr. Abe Schultz, Capital $2,500;
Memo. 33
Jan. 5: Dr. Accts. Rec.Juan Alvarez $80;
Cr. Grooming Revenue $80;
Invoice 212
Jan. 9: Dr. Utilities Exp. $150; Cr. Cash
Jan. 11: Dr. Abe Schultz, Withdrawals
$700; Cr. Cash in Bank $700;
Check 412
Jan. 14: Dr. Kennel Equip. $2,600;
Cr. Accts. Pay.Dogs & Cats Inc.
$2,600; Invoice DC92
Jan. 16: Dr. Salaries Exp. $400; Cr. Cash
Jan. 18: Dr. Abe Schultz, Withdrawals $65;
Ofce Equip. $65; Memo. 34
Jan. 23: Dr. Cash in Bank $80; Cr. Accts.
Rec.Juan Alvarez $80; Receipt 301
Jan. 28: Dr. Grooming Equip. $250;
Cr. Accts. Pay.Pet Gourmet $250;
Invoice PG333
Jan. 31: Dr. Accts. Pay.Dogs & Cats Inc.
$1,300; Cr. Cash in Bank $1,300;
Check 414
The Accounts Receivable accounts total
$0. The business had one sale of services
on account (January 5, to Juan Alvarez,
for $80; the debit side of the entry is
Accts. Rec.Juan Alvarez).Juan Alvarez
paid the amount in full on January 23.
(The credit side of the entry is Accts.
Rec.Juan Alvarez.)
Analyze
Chapter 6 159
CHAPTER 6 PROBLEMS
Transactions
Juanita Ortega is the owner of Outback Guide Service. The following
accounts are used to record the transactions of her business.
General Ledger
101 Cash in Bank 205 Accts. Pay.Peak Equipment Inc.
105 Accts. Rec.M. Johnson 207 Accts. Pay.Premier Processors
110 Accts. Rec.Feldman, 301 Juanita Ortega, Capital
Jones & Ritter 302 Juanita Ortega, Withdrawals
115 Accts. Rec.Podaski 310 Income Summary
Systems Inc. 401 Guide Service Revenue
130 Office Equipment 501 Advertising Expense
135 Office Furniture 505 Maintenance Expense
140 Computer Equipment 515 Rent Expense
145 Hiking Equipment 520 Salaries Expense
150 Rafting Equipment 525 Utilities Expense
201 Accts. Pay.A-1
Adventure Warehouse
Date Transactions
Jan. 1
2
4
6
10
13
15
18
22
25
30
Juanita Ortega contributed the following assets to her busi ness:
cash, $1,500; hiking equipment, $2,000; rafting equip ment,
$2,500; and office furniture, $500; Memorandum 21.
Issued Check 515 to Town News for a $75 ad.
Purchased $3,000 in rafting equipment on account from A-1
Adventure Warehouse, Invoice AW45.
A group from Feldman, Jones & Ritter went on a hiking trip. The
group was billed $4,800 for guide services, Sales Invoice 300.
Paid $300 to Dunns Painting and Interior Co. for painting the
office, Check 516.
Made a $1,000 payment to A-1 Adventure Warehouse toward
the amount owed, Check 517.
Received a check for $4,800 from Feldman, Jones & Ritter in
payment of their account, Receipt 252.
Juanita Ortega paid herself $600 by issuing Check 518.
Billed a client, Mary Johnson, $1,200 for completing guide
services on a hiking expedition, Sales Invoice 301.
Paid the monthly telephone bill for $175 by issuing Check 519.
Purchased a $3,600 computer system from Premier Processors.
Made a down payment for $1,800 and agreed to pay the
balance within 30 days, Check 520 and Invoice 749.
Generalize about Outbacks cash sales and credit sales. Analyze
Problem 67
1. Select the problem set for
Outback Guide Service
(Prob. 67).
report.
activity.
7. End the session.
TIP: Press SHIFT? in an
Account No. field to display an
account list.
SMART GUIDE
160 Chapter 6 Problems
CHAPTER 6
PROBLEM 67
Transactions
Jan. 1: Dr. Cash in Bank $1,500, Hiking
Equip. $2,000, Rafting Equip. $2,500,
Ofce Furniture $500; Cr. Juanita
Ortega, Capital $6,500; Memo. 21
Jan. 2: Dr. Advertising Exp. $75; Cr. Cash
Jan. 4: Dr. Rafting Equip. $3,000; Cr. Accts.
Pay.A-1 Adventure Warehouse
$3,000; Invoice AW45
Jan. 6: Dr. Accts. Rec.Feldman, Jones,
& Ritter $4,800; Cr. Guide Service
Revenue $4,800; Invoice 300
Jan. 10: Dr. Maintenance Exp. $300;
Cr. Cash in Bank $300; Check 516
Jan. 13: Dr. Accts. Pay.A-1 Adventure
Warehouse $1,000; Cr. Cash in Bank
$1,000; Check 517
Accts. Rec.Feldman, Jones, & Ritter
$4,800; Receipt 252
Jan. 18: Dr. Juanita Ortega, Withdrawals
$600; Cash in Bank $600; Check 518
Jan. 22: Dr. Accts. Rec.M. Johnson
$1,200; Cr. Guide Service Revenue
$1,200; Invoice 301
Jan. 25: Dr. Utilities Exp. $175; Cr. Cash in
Jan. 30: Dr. Computer Equip. $3,600;
Cr. Cash in Bank $1,800, Accts.
Pay.Premier Processors $1,800;
Invoice 749/Check 520
Outback has more credit sales than
cash sales. (A review of the journalized
transactions shows that Outback had two
credit sales but no cash sales.)
Analyze
160 Chapter 6
PROBLEM 68 Recording General
Journal Transactions
Greg Failla operates Showbiz Video. The follow ing accounts are used to
record business transactions.
General Ledger
101 Cash in Bank 207 Accts. Pay.New Media Suppliers
105 Accts. Rec.G. Cohen 209 Accts. Pay.Palace Films
110 Accts. Rec.J. Coletti 301 Greg Failla, Capital
113 Accts. Rec.S. Flannery 305 Greg Failla, Withdrawals
115 Accts. Rec.Spring 310 Income Summary
Branch School District 401 DVD Rental Revenue
130 Office Equipment 405 HD projector Rental Revenue
135 Office Furniture 501 Advertising Expense
140 Computer Equipment 505 Equipment Repair Expense
145 Blu-ray discs 510 Maintenance Expense
150 Video Equipment 520 Rent Expense
201 Accts. Pay.Broad Street 525 Salaries Expense
Office Supply 530 Utilities Expense
205 Accts. Pay.Computer
Horizons
Date Transactions
Jan. 1
3
5
7
10
12
15
18
25
Deposited $3,400 in receipts. Of that amount, $1,900 was HD
Projector rentals and $1,500 was DVD rentals, Receipt 435.
Wrote Check 1250 for $325 of equipment repairs.
Purchased $400 in Blu-ray discs from Palace Films on account,
Invoice PF32.
Bought from New Media Suppliers $2,600 in video equipment.
Made a down payment of $600 and agreed to pay the balance
in two installments, Check 1251 and Invoice NM101.
Rented DVDs to Spring Branch School District. The school
district agreed to pay $1,800 at a later date, Sales Invoice 1650.
Issued Check 1252 for $750 to Computer Horizons for the
amount owed to them.
Deposited $5,600 in receipts. HD Projector rentals amounted to
$4,400 and DVD rentals were $1,200, Receipt 436.
Paid Clear Vue Window Cleaners $100 for monthly window
cleaning, Check 1253.
Made a $1,000 installment payment toward the amount owed
to New Media Suppliers by issuing Check 1254.
Problem 68
1. Select the problem set for
Showbiz Video
(Prob. 68).
report.
activity.
7. End the session.
SMART GUIDE
CHALLENGE
PROBLEM
Problem 68
Use the source docu ments
in your working papers to
complete this problem.
SOURCE DOCUMENT
PROBLEM
Calculate the total expenses incurred in January. Analyze
CHAPTER 6
PROBLEM 68
Transactions
Jan. 1: Dr. Cash in Bank $3,400; Cr. DVD
Rental Revenue $1,500; HD Projector
Rental Revenue $1,900; Receipt 435
Jan. 3: Dr. Equip. Repair Exp. $325; Cr.
Cash in Bank $325; Check 1250
Jan. 5: Dr. Blu-ray Discs $400; Cr. Accts.
Pay.Palace Films $400; Invoice PF32
Jan. 7: Dr. Video Equip. $2,600; Cr. Cash
in Bank $600, Accts. Pay.New Media
Suppliers $2,000; Invoice NM101/
Check 1251
Jan. 10: Dr. Accts. Rec.Spring Branch
School District $1,800; Cr. DVD
Rental Revenue $1,800; Invoice 1650
Jan. 12: Dr. Accts. Pay.Computer
Horizons $750; Cr. Cash in Bank
$750; Check 1252
DVD Rental Revenue $1,200;
HD Projector Rental Revenue $4,400;
Receipt 436
Jan. 18: Dr. Maintenance Exp. $100; Cr.
Cash in Bank $100; Check 1253
Jan. 25: Dr. Accts. Pay.New Media
$1,000; Check 1254
January 3: $325
January 18: 100
Total: $425
Analyze
CHALLENGE
PROBLEM
Chapter 6 161
CHAPTER 6 H.O.T.
Classic Auto Car Wash
Cl Classic Auto Car Wash
CASE STUDY
WITH
HIGHER ORDER THINKING
REAL-WORLD Applications & Connections
Punctuality
People in different cultures have
different ways of understanding
and using time. This can be a
challenge for businesses in the global
workplace.
ACTIVITY Research cultural
perceptions of time management
and productivity in a country other
than the United States. Summarize
your findings in a one-page report.
Setting Up Accounting Records
Jasmine Lawrence recently purchased property (land
and building) and opened Classic Auto Car Wash. The
business provides a variety of services such as brushless
automatic exterior car wash, interior shampooing, and
detailing. Several workers have been hired to perform a
variety of tasks. As Classic Autos accountant, you have
been asked to offer advice in setting up the accounting
records for the business.
ACTIVITY Write Jasmine a business letter in which
you suggest how she can set up and maintain accurate
accounting records for her business.
INSTRUCTIONS Determine what kind of accounts
you will suggest for Classic Autos chart of acocunts.
What financial advice will you offer the owners?
162 Chapter 6 Real-World Applications and Connections
162 Chapter 6
Setting Up
Accounting Records
1. Although answers may vary, these
accounts will be needed to start the
business: Asset accounts such as
Cash in Bank, Land, Building, and
Equipment; Liabilities, if Jen plans to
make purchases on account; Revenue
accounts for each source of revenue;
various accounts such as salaries and
utilities; and owner equity accounts
for both withdrawals and capital.
2. Responses may include: deposit all
money received by the business
into the business account on a daily
business intact, and write checks
for all disbursements. Never mingle
business accounts with personal
assets, especially cash.
Punctuality
Answers will vary.
CASE STUDY
CHAPTER 6
H.O.T. Audit
Your Personal Finance
Records
Your day-to-day source
documents are personal
financial records. Personal
financial records also
include documents that
are not related to everyday
transactions. Vehicle titles,
birth certificates, and tax
returns are all personal
financial documents. You
can store your financial
documents in home files, a
home safe, or a safe-deposit
box. You can also keep some
financial records on a home
computer.
ACTIVITY Imagine a person
your age who drives to a
part-time job and has a credit
card. Make a list of the types
of records and documents
such a person would
probably have. Create a plan
that describes which records
and documents to store and
where to store them.
Auditing General Journal Entries
In the following transactions, find any errors in the general
journal entries presented.
1. Compare the transactions given below with the entries
recorded in the general journal.
2. If any part of the transaction has been recorded incorrectly,
make the necessary corrections to the journal entries on a
sheet of paper.
POST.
REF.
0 0 2 000
0 0 2 000
0 5 000
0 5 000
Oct. 2
20--
Store Equipment
Cash in Bank
Check 601
4 Cash in Bank
Accts. Rec.Jack Lane
Receipt 102
1
1
2
3
4
5
6
7
8
1
2
3
4
5
6
7
8
Chapter 6 Real-World Applications and Connections 163
Have students research how technology has affected nancial management
for local businesses. Then have students describe how they would use
technology if they were opening a business.
FINANCIAL
LITERACY
Chapter 6 163
Your Personal
Finance Records
Answers will vary and may include:
birth certificate: safe-deposit box
social security card: file cabinet or
safe-deposit box
drivers license: wallet or purse
credit card: wallet or purse
vehicle registration: vehicle
vehicle title: file cabinet or safe-deposit
box
vehicle insurance policy: file cabinet
work pay stubs: file cabinet
tax returns: file cabinet
H.O.T. Audit
Auditing General
Journal Entries
Transaction 1: Cross out Store and write
Ofce above it.
Transaction 2: Cross out the amount and
write $50 above it. Cross
out the receipt number and
write 120 beside it.

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CHAPTER 6 PLANNING GUIDE

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GENERAL JOURNAL PAGE

Accounts ReceivableCity News

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