Double-entry Accounting System

6.3. Example of transactions in general journal

Let's look at the general journal containing transactions from our illustration above:

Illustration 47: General Journal for Huske's Consultants

Trans. No

Date

Account titles

Debit

Credit

1

Jan 1

Cash

10,000

 

 

 

    Contributed Capital

 

10,000

2

May 15

Supplies

400

 

 

 

    Accounts Payable

 

400

3

May 20

Accounts Receivable

2,600

 

 

 

    Consulting Revenue

 

2,600

4

May 25

Operating Expense

600

 

 

 

   Cash

 

600

5

Jun 1

Cash

4,000

 

 

 

    Notes Payable

 

4,000

6

Jun 1

Prepaid Rent

2,400

 

 

 

    Cash

 

2,400

7

Jun 15

Cash

1,500

 

 

 

    Accounts Receivable

 

1,500

8

Jun 30

Cash

3,600

 

 

 

    Unearned Revenue

 

3,600

9

Jun 30

Cash

700

 

 

 

    Consulting Revenue

 

700

10

Aug 1

Notes Receivable

3,000

 

 

 

    Cash

 

3,000

11

Aug 1

Office Equipment

2,000

 

 

 

    Cash

 

2,000

12

Aug 14

Accounts Payable

400

 

 

 

   Cash

 

400

13

Sep 18

Office Maintenance Expense

800

 

 

 

    Accounts Payable

 

800

14

Nov 30

Distributions

300

 

 

 

    Cash

 

300

Adjusting entries

A1

Dec 31

Interest Expense

163

 

 

 

    Interest Payable

 

163

A2

Dec 31

Rent Expense

1,400

 

 

 

    Prepaid Rent

 

1,400

A3

Dec 31

Unearned Revenue

1,800

 

 

 

    Consulting Revenue

 

1,800

A4

Dec 31

Interest Receivable

100

 

 

 

    Interest Revenue

 

100

A5

Dec 31

Depreciation Expense

800

 

 

 

    Accumulated Depreciation

 

800

A6

Dec 31

Salaries Expense

600

 

 

 

    Salaries Payable

 

600

A7

Dec 31

Supplies Expense

300

 

 

 

    Supplies

 

300

Totals of debits and credits

37,463

37,463

In addition to adjusting entries, closing entries must be made at the end of an accounting period:

Closing entries are made to free up (to zero) the nominal (temporary) accounts so that they are prepared to be used in the next accounting period.

Nominal accounts are revenue, expense, and distribution accounts. All nominal accounts are closed to the Retained Earnings account.

The general journal with closing entries is presented below:

Illustration 48: Closing entries for Huske's Consultants

Date

Account titles

Debit

Credit

Closing entries

Dec 31

Consulting Revenue

5,100

 

 

Interest Revenue

100

 

 

    Retained Earnings

 

5,200

Dec 31

Retained Earnings

4,663

 

 

    Operating Expense

 

600

 

    Office Maintenance Expense

 

800

 

    Interest Expense

 

163

 

    Rent Expense

 

1,400

 

    Depreciation Expense

 

800

 

    Salaries Expense

 

600

 

    Supplies Expense

 

300

Dec 31

Retained Earnings

300

 

 

    Distributions

 

300

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