Acct 1 Chapter 6

                                                              Patchogue-Medford High School

Accounting I – Chapter 6 Notes

Mr. Butzke



Chapter 6 – Recording Transactions in a General Journal                                                                                                                                                     Page 132


Objective: Students will be able to demonstrate their knowledge in using the first three steps of the Accounting Cycle: analyze source documentation, analyze the transaction for accounts to be affected, and record or journalize them into a journal using the double entry system.


Section 1 – The Accounting Cycle


Accounting Cycle – The accounting period of a business is separated into 9 activities that help the business keep its books and records in an orderly, accurate, and timely fashion. (page 135)


The 9 Activities are: (in order)

  1. Collect and verify source documents (covered in this chapter)
  2. Analyze each transaction (covered in this chapter)
  3. Journalize each transaction (covered in this chapter)
  4. Post to the General Ledger
  5. Prepare a Trial Balance
  6. Prepare a Work Sheet
  7. Prepare Financial Statements
  8. Journalize and post Closing Entries
  9. Prepare a Post-Close Trial Balance


Accountants report information in accounting periods or cycles. They are:


                    -Quarterly (covers 3 months)

                    -Semi-Annually (covers 6 months)

                    -Annually (covers 12 months)

                             - Calendar year (starts on January 1 and goes thru December 31)

                             - Fiscal year (any 12 month period not starting January 1)


All business activities create transactions. All transactions have three steps:


Step 1 Source Documents

           A business transaction is physical evidence of something that happened produces printed or written evidence. Examples include; Receipt, Invoice, check, memo, price tag,ect

           (Problem 6-1, Source Documents pg.138, WB pg 66)


Step 2 Analyzing Business Transactions

           Analyze each business transaction from the source documentation to determine which accounts are affected and which accounts will be debited and which accounts will be credited.


Step 3 Recording Business Transactions in a Journal (Journalize each transaction)

           What is a journal? It is a record of all of the transactions of the business recorded when the source document has been analyzed.  It is kept in chronological order and must have at least two accounts that are affected.

           Journalizing – the recording or writing down of business transactions into a journal by using debits and credits. This is called a journal entry. All journal entries must be equal, Dr. = Cr.



Section 2 Recording Transactions in the General Journal (page 140)

  All transactions are recorded into a General Journal by using at least two accounts and one debit and one credit. All of the business’s transaction are recorded the G/J. Parts of a General Journal:




  Reference number

  Debit account

  Debit amount

  Credit account

  Credit amount

   Explanation of that transaction with source document reference


Seven Steps to Analyzing a Business Transaction (pg 140)


Analysis         1. Identify the accounts affected

                    2. Classify the accounts affected

                    3. Determine the amount of increase or decrease for each account

Dr. & Cr. Rules       4. Which account is debited and for how much

                             5. Which account is credited and for how much

T-Account Analysis          6. What is the complete entry in T-Account form

Journal Entry                            7. What is the complete entry in journal entry form


Review the transactions on pages 140 – 150 to show analysis.


Correcting an error  - whether it is an amount, account, or description just put a single line thru the incorrect item.  Correction. (pg 151)






Review of Debit and Credit Rules:


Debit and Credit Rules                                                                                  First

                                                       Natural       Temporary/    F/S          Digiit

                  Increase      Decrease     Balance       Permanent   I/S or B/S    in Acct #


Asset              Dr.                      Cr.                  Dr.              P           B/S                        1

Liability           Cr.              Dr.                          Cr.                P          B/S                       2


    Capital         Cr.              Dr.                          Cr.               P           B/S                       3

    Withdrawal  Dr.                      Cr.                  Dr.              T           B/S                       3

Revenue          Cr.              Dr.                          Cr.               T           I/S               4

Expense          Dr.                      Cr.                  Dr.              T           I/S              6  & 7






Terms Page 154

Questions Page 155









Prob.  6-2        Recording Business Trans.       TB pg 152   WB pg 66

Prob.  6-3        Analyze Business Trans.           TB pg 157   WB pg 66                     

Prob.  6-4        Recording Journal Trans          TB pg 157   WB pg 67    PC 75                  Q 85

Prob.  6-5        Recording Journal Trans          TB pg 158   WB pg 68    PC 81                  Q 91

Prob.  6-6        Recording Journal Trans          TB pg 159   WB pg 69    

Prob.  6-7        Recording Journal Trans                   TB pg 160    WB pg 70  

Prob.  6-8        Recording Journal Trans          TB pg 161   WB pg 71