So the question is, is cash affected here. So if we go up, we're gonna say yeah, cash the fact that we pay the employee with cash a check, but that's going to be cash in this case. So cash has a debit balance, we're gonna make it go down by doing the opposite thing to it, which in this case would be a credit. So I'm gonna go ahead and copy cash, I'm gonna go down to H and nine, right click and paste it 123 also note that we're not talking about payroll taxes or anything right now we're just this would be the simplified journal entry for payroll if we didn't have payroll taxes, which we will talk about at a later time. And cash is going to go down by the amount paid being 800 signups a negative 800 to represent a credit in this worksheet. If we credit something we're also gonna have to debit something with a debit on top and sell I ate for 800.

Now the only question is, what will that debit be? If we look at the trial balance, we're looking for something related to payroll. So we see salaries payable Here we see a salaries expense down here. Now, which one are we going to put it into In this case, it's going to be the expense. When we record the expense for the the books for the payroll department, it's generally going to be recorded to an expense. Now, you'll note that there's something in salaries payable right now.

And you might be asking, why is there something there. And the reason for that could be that we had an accrual entry, which we'll talk about later from the prior period. And I'm going to adjust that we're going to take a look at that and make those adjustments at the end of the period and discuss that as we go at that time. In terms of the payroll department, oftentimes, they will just record the salary expense in the salary expense area, and be more actually on a cash basis in that in that way. So expenses have debit balances, such as this miscellaneous expense represented by the fact that does not have brackets. Expenses generally only go up and we're going to make it go up by doing the same thing to it, which in this case, would be another x debit.

So I'm gonna right click and paste it in 123 All right, there's our transaction debit the salaries expense, credit cash, we're gonna go ahead and post that out. So I'm going to look for salaries expense first, that's going to be an expense area, it's going to be a blue account over here. So the assets are here first, and they're green and the liabilities are orange and then the equity and then the revenue and then there's expense accounts. And here's salaries expense way over here in Ay Ay, ay ay ay nine. So it's an AI nine, we're here. And notice, again, it goes to Z and it keeps on going out.

It can be a little confusing to go through these screens with a lot of different ways that you can manipulate Excel to work with screens that are larger than the screen we're looking at, you can manipulate the size. You can also freeze the panes and whatnot, whatever works for you. But in this cell, I'm going to say equals and I'm going to hold down the left arrow until I hit the wall. I'm going to go all the way till I hit the wall, and then I'm looking for that 800 related to salaries which isn't so high Eight and Enter. And notice, you could go over here, if you're following the video, you could just type in equals I eight. But I find that it's a lot nicer to go point to it because then you physically are pointing to it and seeing what is going in that So, alright, so I'm going to go back over here.

Now, of course, we were out of balance by the 800. The other side being cashed out, bounced out 800 here, here, and cash is going to be over here and P 16. So P 16. In the cash we're posting the general journal to the general ledger equals they're gonna point to that 800 now, and the 51 six is going to go down by 800 to the 58. And we can see we're back in balance here, which is good green zero is good because that means the debits minus the credits equal zero. So the debits equal the credits.

And what happened to net income? Well, it went down by the 800. So we have 226, eight now, minus two eight minus two, four. No. Also if you're using Excel and you highlight a certain set of numbers, it will generally count laid out for you in the formula bar. So there's the 25 six, here's the 25, six.

So that's a handy little thing to have, as well go down to the next transaction, which is going to be on a 535 30. We pay cash for miscellaneous expense, someone's getting miscellaneous expense, probably not a great expense to have, but we're going to keep the expenses a little bit smaller here. So that to keep this problem a little bit more simplified, the expenses will probably have more expenses than any other type of account for most companies. But note that they all act the same way. It's just a matter of how do we want to group the expenses. If we have a lot of little things that we pay for that are not significant, we may put them in accounts such as miscellaneous expense, other types of accounts similar to misplacing expense or like office expense, office supplies, those are types of things that sometimes people put a lot of stuff into, which may not be exactly office supplies, you know, so but you You want it you want to put your expenses in a category system, that is one helping you to make decisions, but to isn't so cumbersome that I have so many expense accounts that it's not helping you make decisions just cluttering things up.

So obviously, I don't like the expensive miscellaneous type of category too much. But there if there are some small things that are not material to decision making, it may be appropriate to put them in the miscellaneous. And obviously, if someone just went into a small company and drew cash out of the checking account and spent it and didn't keep the receipts and whatnot, then we are going to have to, you know, record it somewhere. And miscellaneous expense or office supplies and whatnot, is usually where that type of thing will go. And so then here is cash affected for this transaction. We're going to say that, yes, cash has a debit balance, we're going to make it go down how we're going to make it go down by doing the opposite thing to which in this case would be a credit.

So I'm going to copy that kind of put our cursor under the show. Here's the date and progress are under that in H 12. In this case, right click and paste it 123 the amount that we're going to put there. Alright, so the amount will be a negative 250. In this case for the credit balance, if we're going to credit something, we're also going to debit something for that 250. And what will that debit be?

And in this case, we already said that the debit will be our miscellaneous expense. So if we take a look at this, remember that the assets are going to be up here on top, then the liabilities, then the equity, then the income and the expenses down here, we're down here and miscellaneous expense, we can see that the expenses all have debit balances, they only go up in the debit direction, therefore, we're going to do the same thing to it, which in this case would be another debit. So I'm going to right click going to copy this account, you're going to put it on top in H 11. Right click and paste 123. Now we're going to go and post this transaction to the general ledger. So we're looking for the miscellaneous account.

We're going to post it to the general ledger which is over here and we can see that this is an order assets are where we start off with cash an asset receivable an asset, payables and asset are prepaid insurance, then accounts payable is a liability, then equity, and then revenue, and then expenses. And of course, miscellaneous is way on the bottom, because we're kind of like ashamed of it, we put it way in the bottom over here. So we got it over in am 22, we have this miscellaneous account. So it goes from z and then remember, goes all the way over to aim 22 down here in miscellaneous, we're gonna say equals, I'm going to post it this way, I'm going to hit the left arrow, hold it down till I get all the way down here, and then scroll up to that 250 which is in i 11, and enter.

Again, you could just delete it and put in equals I 11. You could put the number in there but I highly recommend putting the formula in there because it can really help you if you are out of balance. So for example, in this case, we are of course out of balance by the 250 at this time And that's because we haven't recorded the cash side. If we didn't know that, and we're trying to figure it out, we could try to do something like, what if we just deleted the numbers? Would it be back in balance over here? If we use formulas, then it may well be.

So if I say delete, that, I could say, oh, what's something that has to do with that transaction. And then if I say, undo, then our numbers are back, we're back out of balance. And then we could try to see which one of these aren't posted. And if I put my cursor there, and we use our tracer items here, not that one, but this one, then we can say, oh, that one's posted over there. And I can hit this one and say, oh, that one's not posted. That's the problem.

We didn't post that if we hard code, the numbers, we won't be able to do that. And where are those located? Again, those are in the formulas area in the formula auditing, and they're up here in these trace items. So it can be really helpful to figure things out if we use the formulas in this system when we post them. So we're going to post the second half now to the cache a cache Representative we're in the credit side we're in cell p 17. Going to say equals and then scroll over to that credit of 250 in j 12.

Once we hit enter the 50,008 will go down to 50,005 50 puts us back in balance over here, what happened net income, it went down. So we're calculating revenue minus 800 minus six, five is 225 350. also showing down here 25 350 in the taskbar, because we are highlighting those areas, that is income. That's not a loss credits are actually good on the income statement. Alright, next transaction, we're down to the end of the month here, it's going to be 531. And once again, we pay cash for miscellaneous expense. So we're paying our bills here, and we're not grouping them very well.

I don't think we're putting in miscellaneous expense, but we're assuming that they're in material and therefore we're grouping them into one area here, and therefore it's going to be a similar transition. We paid cash, cash is a debit balance, we're gonna make it go down by doing the same thing to it by doing the opposite thing to it, which in this case would be a credit. So I'm going to copy the cash, I'm going to put it under the date. So here's the date going to put it under the date in H 15. Right click Paste it 123 then we're going to go into the credit column, the credit amount being in this case of negative represents credit 300 and enter that puts the brackets around it. If we credit something, we also need the debit and the debit generally goes on top, so that will be 300.

And so I 14 the only question is, what will that debit be? Once again, we bought we bought something with a miscellaneous expense. So we got assets and then we got liabilities, equity, income, missile, and then expenses. All expenses have debit balances, they generally only go up and how do we make something well, we do the same thing to it, which in this case would be another debit. So we're going to debit the miscellaneous expense which we already knew because we credited cash right clicking paste in 123 values only Now we can post this out in a similar way. Once again, this is a general journal, we're going to post that to the general ledger.

We're going to post miscellaneous expense the general ledger is in order by account, we have assets in green liabilities in orange equity in brighter radio or blue, and then revenue and expenses in the less bright blue. And we're down here way in the bottom in cell am 23. In miscellaneous expense equals, I'm going to hold down the left arrow till I hit the wall, and then scroll up to the miscellaneous expense 300 in I 14 and enter, we should see that 300 post up here, we should see the 650 go up in the debit direction to 950. We'll also see that 950 over here on trial balance because it pulls over. We are now out of balance by the 300 until we post the cash side of the entry. So we're going to go to cash.

General Ledger over here and say equals And then scroll over to the cache, which is the credit and we see debit balance here is going to go down, because we're doing the opposite thing to it to 50,000 to 50. That puts us back in balance. And we know that net income went down by that 302. In this case, 2550 calculated as the revenue less the expenses, revenue is winning, which is good by 2550. All right, next transaction on 331. Again, we have cash from clients for work done in this month.

So we had we did work this month and we got the cash this month. All right, so is cash affected? Yeah, we did work and we got cash. So cash or the debit balance, we're gonna make it go up by doing the same thing to it, which in this case would be another debit. So when I right click on that going to copy that, gonna put that on top on cell h 17. Right click and paste it 123.

So the amount that we got in this case is 3000. So we're going to credit 3000 as well and negative 40,000 and enter, what will that account be? Well, we earned revenue. That's why people are going to pay us cash because we earned it and we earned it in this time period. So we did the work this time period, we can see that we have assets, liabilities, equity, and then revenue. And so revenue has a credit balance, it only goes up, we're gonna do the same thing to it in this case, which would be another credit, we're going to right click and copy, we're going to put that underneath in cell 18, right click and paste it 123 then we're going to go ahead and post this out.

So we'll go over here to sell Oh, 19 I mean, oh 19 equals and scroll over and point to that 3000 that 50,002 50 will go up by 3002 53 to 50. Now we're out of balance, of course until we record a second half. Remember recording the journal entry to the general ledger, and where's the revenue account over here. So in order assets Then liabilities and then equity and then revenue. So here's revenue. Notice that only has credits because revenue only goes up in the credit direction.

And we're in a f 23, a f 23, I'm going to say equals in that cell and then hold down that left arrow till I hit the wall, looking for that 3000. There it is. And that's the revenue account, we're gonna hit Enter, and that makes revenue go up from 26, eight to 29, eight. And if we scroll back over to trial balance, we'll see that 29 eight over here as well. What happened to net income it went up by the 3000. Now having 29 eight months, eight months 250 Givens 2850.

All right. Next transaction, we are still on 531. And we had services provided on account cash has not yet been collected. So now this is the work that we did that we didn't get cash in this month for. So therefore, we did work and haven't got cash yet, but we are gonna assume that we got something what do we get? We got an IOU.

What's the value account? accounts receivable? So what if we did the work, we're gonna assume we got something on the accrual basis, we don't do work and not get anything. We haven't got anything physically yet, but we're gonna assume that we had an IOU here, for the work that we did. The accounts payable has a debit balance, we're gonna make it go up by doing the same thing to it, which in this case would be another debit, we're going to right click on that going to copy that going to bring our cursor down to h 20, right click and paste it 123 then the amount will be 2000. We're going to credit something for the same 2000s he put a negative 2000 in this case.

And then the question is, why are people gonna pay us money because we earned revenue. So it's assets on top, then liabilities, then equity, then revenue, revenue has a credit balance, we're going to make a quote by doing the same thing to it, which in this case would be another credit. So I'm going to right click on that kind of copy that Gonna put that in so h 21, right click and paste it 123 then we can go ahead and post this out. So this is the general journal that we're going to post to the general ledger, we're looking for the accounts receivable and accounts payable will be in so s 13, we're gonna say equals in so s 13, I'm going to go ahead and point to that 2000 next to the receivable, which should make the receivable go up from three, eight to five, eight, puts us out of balance by that 2000 until we record the other side, so the other side being revenue.

So the general ledger is in order we got assets over here in green, then liabilities and orange and then equity and then revenue. So here's revenue down here, notice they all have credits because they only go one way they go up in the credit direction, and we are in a f 20 in this case. So we're gonna say equals and a f 20 and hold down that left arrow until we get to the revenue account. There's the 2000 and say enter and revenue will To go up from 29, eight to 31, eight, where will we see that 31 eight. Also on the trial balance is where we will see it right there. What happened to net income, it went up by 2000 to 31, eight minus eight minus 950 equals net income of 30,050. also shown in the tab bar 30,050, because we are highlighting those cells.

Okay, one more transaction on 531. And the owner withdraws money. So if we are the owner, then we're going to say okay, I'm going to take some money out of the business, the business accounts, of course, for business, if I want to go on vacation or whatnot, on the personal side, then I should first to take the money out of the business account, put it into my personal account, then go on vacation, so that's, that's going to be the plan now. We're going to pull out the money from the business. So is cash affected? Yeah, for the business, the money is being pulled out.

So cash has a debit balance. We're gonna make it go down by doing the opposite thing to it, which in this case would be a credit I'm going to copy the cache, I'm going to put it on the bottom. So here's the date, we're going to go to the bottom right click Paste it 123, we're going to go to the column j, credit side, negative 10,000. We're going to debit something that debit will go on top for the same amount 10,000. And the only question is, what will that debit be in, and the owners drawing the money out. So it's going to be down here in the equity section.

And the reason I make the equity section highlighted in blue in this case is because that's kind of like the dividing line between the balance sheet which is up here, and the income statement, which is down here. So here's the equity section. Here's the amount owed to the owner as of the beginning of the time period, and we're going to make that go down. But we're not going to put it to that account directly. We're going to make kind of like a contra equity account just called draws, so that we can see directly how much money was taken out by the owner. And that's important when we're sole proprietor becomes more important when we're a partnership because we want to see Actually how much each partner took out during the certain time period.

So we're going to say draws is going to be the debit, we already know it's gonna be a debit because we credited cash. If we think about it, why is it a debit, because really, it's bringing this equity account down. It's kind of like a contra equity account that has a credit balance, we need to make it go down by doing the opposite thing to it. So we're making a new account, which will actually go up in the debit direction, but it's really bringing the total equity down. So we're going to go ahead and copy that and paste it here in age 23, right click Paste it 123 and then post that out. So that's an equity account.

So we're posting this general journal entry to the general ledger looking for draws which is an equity account. General Ledger is an order assets and then liabilities, then equity. So here's draws over here in a 14 or a 14, we're going to say equals, we're going to hold down the left arrow We're going to go to this draws of 10,000 and Enter. And there's the 10,000, we can see the 10,000. Here, we are now out of balance by the 10,000 until we record the other side to cash, which will be over here in. So P 20.

So we're in p 20. And we'll just say equals and left down to cash. And when we hit enter the 10, that 53 to 50 will go down to 5343 to 50. And that will also be on the trial balance over here, and we are back in balance. So just notice that the trial balance is back in balance. If we look at the the accounting equation, we see that assets equal liabilities plus owner's equity.

If we rearrange that, also note that it also means that assets minus liabilities will equal equity, meaning the equity is the book value. And you can see that here to notice that if I highlight the assets, adding this adding this adding this I'm up to 77 one If you keep watching that number, it's going to now go down by the 330 to the 76 770, then down to 68 970, and so on till it gets to 60 to 350. That 60 to 350 has to be the same as these blue numbers here. So the reason all these numbers are blue, even though we have the revenue, the expenses is because really they're all part of equity notice they're all part of this number. And that has to make sense because the top half represents what we have minus who we owe it to. The bottom half represents what is owed to the owner or what the book value of the company is worth.

But it's currently broken out between basically the beginning balance and or investments and what was taken out and all of the what was earned through that time period. So if we highlight this second half, we also come out to this 60 to 350, which we have up here 60 To 350 So, keep that in mind. You can look at this trial balance and spend some time looking at the trial balance and highlighting different things and seeing how this ties out to the accounting equation.