The credit The only question being, what will that debit be? So pay cash for miscellaneous expense. So we don't know what miscellaneous expenses and obviously in real life we would like to categorize things as much as possible. But to keep this problem simplified, we're going to limit the amount of expenses. Now, where are the expenses, we have assets, then we have liabilities, then we have equity, and we have revenue. And then we have expenses down here.

So expenses are at the bottom, and we're going to put miscellaneous expense at the bottom in this case. So here we have miscellaneous expense, expenses, basically, our debit balance accounts and they only go up, they're basically only going to be debited in stuff except for rare cases that we'll get into at a later time. So we're always going to debit an expense because they always are debit balance accounts and they go up, we knew we're going to debit it because we credited cash. So let's copy this I'm going to copy this. I'm going to put it in so C 11. So there see 11 you see that one and see 11, right click and paste it 123 There we have that.

So now we can go ahead and post this out. So we're going to post this to the general ledger. This is called posting the general journal to the general ledger. And we're looking for miscellaneous expense that's going to be way over here. So I'm going to make this a little bit smaller, like so. And we're going to go way over to the end miscellaneous expenses weigh on the end.

And it's down here, it's going to be in the debit. So it's in column A m 21. Now, why is it a m, because once you get past column z, then it starts at a B A, C, bla bla, back to a m. So that's how the numbering system is going to work. So we're on a m 21, I'm going to say equals and I'm going to hold down the left arrow and hold it down till I just hit the wall over here. And then I'm going to go find that 400 debit. We're recording this 400 for miscellaneous expense in the general ledger for miscellaneous expense when I hit Enter, and that puts me back over here and we went from zero, up in the debit direction to 400 and we can See that 400, then on the trial balance, it should record automatically over here, there's the 400, there put us out of balance, it made net income go down.

So that's the first time net income is affected, meaning we have revenue minus expenses, there is no revenue. And we only have expenses. Therefore, we have basically a loss in this case of 400. All right, so then the cache is going to be the other side of that. So cache we know is right here, nice and handy. We can see that in so P 11.

So we're going to say equals NP 11. and scroll over here to notice I'm using the arrows now. And I'm pointing to the cash credit in cell E 12. When we hit enter, because this is a credit and cashes debit balance account, they're the opposite. Therefore, it goes down from 29 to 228, eight. All right, so we're going to go back see the next transaction going to make this a little bit larger once again, and we are now on I'm going to skip a line on 513. So five 13 then says vendor paid vendor for part of the debt incurred in the prior month recorded as accounts payable.

Okay, so we paid the vendor. So once again is cash affected? That's going to be the question. And in this case it is it doesn't say cash this time, but we paid something. I'm assuming we paid it with cash. Now cash does include checks and whatnot.

So checks are part of cash for this problem. So cash has a debit balance, we need to make it go down. How do we make something go down, we do the opposite thing to it as what it is cash is a debit represented by the fact that it doesn't have brackets, so we're going to credit it because that's the opposite thing to it in order to make it go down. I'm going to right click Copy that. Here's the dateline I'm going to put my cursor under that in cell C 15. Because the credits go on the bottom and right click on a paste at 123 values only.

We're going to go in the credit column on the general journal worksheet and put a negative to represent the credit and the amount will be free. 500 when we hit enter the format of the sale, we'll change it to have brackets, I'm going to if we credit something, we're also going to have to debit something. So I'm going to be up here in sales c 14 and put the 500 in there as well. So there's the debit side, there's the credit side, the only thing we don't know at this time is what the credit account will be. And we recorded services provided but for which cash had what appeared paid vendor for part of debt incurred. So we paid the vendor but we didn't get anything today.

We got something sometime in the past. So we have an IOU basically out there to our vendor. The account that represents an IOU is a liability. It's called accounts payable. So accounts payable represents the money that we owe to somebody else. In this case, $800 we're paying 500 of it, we see that it has a credit balance, we're paying it off, therefore it should go down because we don't owe it anymore.

We make something go down by doing the opposite thing to it. asked what it is, that's a credit represented by the brackets, we already know that we're going to debit it because we credited cash. That makes sense that will make it go down because it's the opposite of what it is, we're going to go ahead and copy the accounts payable, put that on the top of this journal entry, right click and paste it 123. All right, so we're going to post this out. So I'm going to scroll over here a little bit so we can see more of our screen and make this a little bit smaller, like so. And then let's post this out.

So we're going to look for accounts payable, so accounts payable is over here, we're going to be in the debit side, in this case, so I'm in cell A nine, so a non can say equals, kind of take my cursor and point to the 500 and then when we hit enter the 800 will go down by 500 to the 300. That 300 then will also be over here on the accounts payable. For some reason it's the same as the receivable that's just a coincidence. And but there's the 300 and we are out of balance. By 500 now, so now we're going to post the cache side of it. So if we go to the geo and cache and we go down here to the cell, oh 12, I'm sorry, we're going to go down to P 12.

I'm going to post it as a credit because it's in the credit column, we're going to say equals, and then I'm just going to point to that cache number, and it has a 15 in it. Then when we hit enter, it will go from 28, eight down to 28. Three, because it's a debit balance, and we did the opposite thing to it, which is a credit. All right, let's make this a little bit larger once again, and keep posting these out. We're going to go down to the next transaction, which happens to be in this case on 515. So on 515, we have recorded services provided but for which cash has not yet been received.

Okay, so we've seen that before, I believe so we did. We've recorded services, but we haven't done that yet. Anyway. So we did work but we didn't get the money yet. So then the question Again, is is cash affected? And in this case, we're going to say no, we recorded work, we did work, but we have not yet received cash.

So we did work, we're going to send out the invoice basically saying, Hey, we did work pay us, but we haven't got the cash yet. So what did we get? Instead, we got kind of an IOU. When we do the work, we say we earned the work, people owe us money. So the asset that we have is an asset. In this case, it's basically means that it's an IOU we did the work people owe us money as of the time the work is done.

And we can see that the IOU account, the accounts receivable, has a debit balance, we need to make it go up. people owe us more money. So I'm going to go ahead and debit that do the same thing to it, just like if we got paid with cash, we're getting paid with an IOU in this case. So I'm going to right click, Copy that. I'm gonna put that on the top right click and paste it 123. So that's going to be for the amount of in this case.

Seven five. If we debit something, we will also have to credit something. So I'm going to be over here in column in cell E, eight tene e 18, I'm going to put a negative 750. And once we hit enter, that will put the brackets around it because of the formatting Okay, so and now we just need to know what that credit account will be. And the credit will be in this case, finally, revenue, we earned the revenue. So basically, anytime we do work, we earn revenue, revenue only goes up.

So whether we get paid cash or not, when we do work under an accrual basis, we will record an increase in revenue. Revenue has a credit balance. So revenue has a credit balance, we're gonna make it go up by doing the same thing to it, which is another credit. revenue will always go up for the most part, if we do work, revenue will go up, net income can go down, but revenue generally just goes up. So I'm going to go ahead and right click that I'm going to copy it. I'm going to put our cursor on C 18.

Right click and paste it 123 just the values only. So then we're gonna go back over here and we're going to make this a little bit smaller again, and see if we could post this out. So we're going to go to the receivables account. So here we have receivables in cell s 10. We're posting this receivable and so s 10 under the accounts receivable, General Ledger that's called posting to the general ledger gonna say equals it gonna point to that seven, five, and that 300 once we hit enter, we'll go up to seven, eight by the seven, five that we have now posted into the accounts receivable, then we're going to go to the revenue that's going to be the blue accounts. So I'm going to go over here a little bit further to the blue over here.

Here's the the revenue account. So I'm in cell AF, at 19, af 19. So remember it goes to Z and it goes a B and whatnot. We're going to say equals in this cell. I'm going to Pull down the left arrow, instead of using the mouse, this time, it's going to hold down the left arrow till I hit the wall. And then I'm going to go to that last entry that I'm in, I'm looking for the revenue.

And I'm just going to go to that so, which is e 18. And then go ahead and hit Enter, and it will make the account go from zero up in the credit direction to seven, five. Where else will we see that seven, five. We see it on the trial balance. So there it is on the trial balance right here. And now that's revenue revenue went up.

So what happened to net income, we can see it right here on our trial balance, the revenue of the seven five minus the expense of the 400 means we have income of seven, one. Now that seven one is income, it's not a loss, even though it has brackets around it and excel sees as a negative number. We see it in terms of debits and credits as the credits are beating the debits therefore we have income of 7001 in this case as of this time, all right, so I'm gonna make this a little bit larger. Once again, we're going to go down to the next item, which happens to be in this case 517, where it says that cash received from clients for revenue earned during this month. Alright, so we did work. And in this case, what we're trying to say there's we did work and we got money in the same time period or within the same month.

And so we want to record the revenue and the cash in this time period at this time. So first question is cash affected? Yeah, in this case, cash is affected. Because it says we received cash, cash is going up cash is a debit balance. How do we make something go up, we do the same thing to it as what it is, which in this case would be a debit. So I'm going to right click on a copy that can put that on the top.

So I'm in cell C 20. Right click, paste it 123. Then we're going to put that in the debit column. I'm in this cell here, so the amount will be seven one. Then we need to credit something for seven one Because we have to have an equal number of debits and credits with every journal entry, so I put a negative to represent the credit of seven one. And when we hit enter, that'll put brackets around it, you will need to put the negative sign in this type of Excel worksheet in order for the formulas to work in the most efficient way, then the only question is what should this account be?

So cash receipts for revenue earned? So we earned revenue. So why do people pay us cash because we earned revenue we earned it in this time period. In this case, we can see the revenue accounts always going to be an order assets than liabilities, then equity, then revenue revenue has a credit balance, it only goes up how do we make something up we do the same thing to it as what it is, therefore we're going to make another credit. So I'm going to copy this. I'm going to paste this in C 21.

Right click Paste it 123 note, we already knew we were going to credit it because we debited cash. All right, so then we're going to post this out. I'm gonna make this a little bit slower. Again, so we can see some more of the general ledger. This is the general journal, which we will now post to the general ledger, which will then automatically update the trial balance. All right, so we're going to go over here to cell Oh 13.

And we're going to say equals, I'm going to point to the cash number there. And once we hit enter that 28, three will go up in the debit direction to 35 four, we are now of course out of balance by the seven one till we record the credit. We're out of balance here, we're out of balance here. And then we will go over to the revenues, revenues wherever you remember, it's, it's in terms of assets than liabilities than equity, and then revenue is down here. revenue is always going to be a credit. So I'm in the credit column, I'm in cell A f 20.

In this case, we're going to hit equals, and this time, I'm going to hold down that left arrow again. I'm just gonna hold it down and note the number changes every time I go, that's fine, until I find the one that I want which is that credit of seven Then I'm going to hit Enter, and it takes the revenue account from seven, five up to 14, six, because we did the same thing to it as what it is, we can see that 14, six on the trial balance as well, what's the effect on net income? Well, net income went up. So now net income is 14, which is that 14 six revenue, what we earned less than miscellaneous expense of 400 at this time, All right, next transaction and make this a little bit larger on the taskbar down here, and we're back to 100% going to go down to 520.

Where we have purchased supplies on account, no cash is paid. So is cash affected? And the and the answer is no. We purchased it on account. So many times if a book says it says we purchased it on account, we got to kind of know that terminology. Obviously here.

We also said that the cash wasn't paid. So you kind of think that as we purchase that maybe similar to being on a credit card or something like that. We do didn't pay cash we have an IOU in the future. If you see the terminology of on account, it's probably going to mean I accounts receivable or accounts payable.