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Accounting cycle I:
Recording business
transactions and
accounting for service
entities
Part B
Chapter 6
Prepared by Wahseem
Soobratty
Financial Accounting
Elements
Balance
2. Liabilities
Sheet
3. Owners Equity
4. Revenues
Income
5. Expenses
Statement
Asset Accounts
Cash at bank
Accounts receivable
Prepaid expenses
Land
Buildings
Liability Accounts
Accounts payable
Unearned income
GST Collection
Mortgage payable
Equity Accounts
Income derived
Expenses incurred
Capital
Drawings or withdrawals
ACCOUNTS: INCOME
STATEMENT
Income
Revenues
Gains
ACCOUNTS: INCOME
STATEMENT
Expenses
Profit
Loss
Example
1.
2.
Cynthia purchases a Van for $32 000 and Massage and Nail Tables for
$6 000 cash
3.
Cynthia
4.
CashDr
53 000
Capital
Motor
Cr
53 000
Vehicles Dr
32 000
Cash Cr
32 000
Equipment
Cash Cr
Supplies
Dr
Dr
6 000
6 000
2 500
Accounts Payable
Cr
2 500
2.
1.
T-Accounts
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Account Number
Date
Explanation
Account Title
Amt
Date
Explanation
Amt
Explanation
Cash at Bank
Amt
2016
Date
Explanation
Amt
2016
1 Cynthia Jones,
Capital
53 000
2 Vehicle
32 000
2 Beauty Services
Equipment
Balance c/d
53 000
Balance b/d
15 000
6 000
15 000
53 000
Cash at Bank
Explanation
Account No.
100
Debit
Credit
Balance
2013
Jan. 1 Cynthia Jones, Capital
2 Vehicle
53 000
53 000
32 000
21 000
6 000
15 000
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Journal Example 1
Cash
Capital
Cash Increasing the entity has more
Capital Increasing the entity has more of a claim against it
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Details
Debit
Credit
20x1
30 June Cash
Capital
100,000
100,000
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Capital 301
Jun 30 100,000
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Journal Example 2
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Details
20x1
30 Jun Inventory
Accounts Payable
Debit
Credit
20,000
20,000
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Journal Example 3
20
Debit
Credit
15,000
15,000
1,000
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Journal Example 4
Date
Details
Debit
Land
60,000
Credit
20x1
30 June
Cash
45,000
Loan
15,000
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Particulars
30 Jun
Cash
Debit
100,000
Capital
30 Jun
Inventory
100,000
20,000
Accounts Payable
30 Jun
Accounts Receivable
20,000
15,000
Sales Revenue
30 Jun
Telephone expense
15,000
1,000
Cash
30 Jun
Land
Credit
1,000
60,000
Cash
45,000
Loan
15,000
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Details
30-JunCapital
Amount
$ 100,000.00
Date
Details
Amount
30-JunTelephone Expense
30-JunLand
$ 45,000.00
Balance C/D
$ 54,000.00
$ 100,000.00
1-JulBalance B/D
$ 54,000.00
1,000.00
$ 100,000.00
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Why
However,
Trial Balance
Account
Cash
Debit
Credit
54,000
Accounts Receivable
15,000
Inventory
20,000
Land
60,000
Accounts Payable
20,000
Loan
15,000
Capital
100,000
Sales
15,000
Telephone Expense
Total
Prepared by Wahseem Soobratty
1,000
$150,000
$150,000
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All supplies of goods and services are subject to GST unless they are nontaxable (if a business is registered for GST)
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GST IN BUSINESS
GST Registration
By law, has a responsibility to collect and pay GST to the Australian Taxation
Office (ATO).
The price of goods and services must include GST (i.e. price is GST
inclusive).
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End of Module 6
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