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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