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)
- Collect and verify source documents (covered in this chapter)
- Analyze each transaction (covered in this chapter)
- Journalize each transaction (covered in this chapter)
- Post to the General Ledger
- Prepare a Trial Balance
- Prepare a Work Sheet
- Prepare Financial Statements
- Journalize and post Closing Entries
- Prepare a Post-Close Trial Balance
Accountants report information in accounting periods or cycles. They are:
-Monthly
-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:
Date
Description
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
Equity
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
Problems
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