Transactions + Debits & Credits

1. Owner invested cash

Description: Owner invested cash in the business

Debit: Cash – 10,000

Credit: Owner’s Capital – 10,000

2. Purchased supplies (cash)

Description: Bought office supplies

Debit: Supplies – 2,000

Credit: Cash – 2,000

3. Provided services (cash)

Description: Service income received

Debit: Cash – 5,000

Credit: Service Revenue – 5,000

4. Paid rent

Description: Paid rent expense

Debit: Rent Expense – 1,500

Credit: Cash – 1,500

5. Paid salaries

Description: Paid employee salaries

Debit: Salaries Expense – 2,000

Credit: Cash – 2,000

6. Bought equipment (cash)

Description: Purchased equipment

Debit: Equipment – 3,000

Credit: Cash – 3,000

7. Earned revenue (not yet received)

Description: Service rendered on account

Debit: Accounts Receivable – 4,000

Credit: Service Revenue – 4,000

8. Paid utility bills

Description: Paid electricity bill

Debit: Utilities Expense – 500

Credit: Cash – 500

Revenue:

Service Revenue = 9,000

Expenses:

Rent Expense = 1,500

Salaries Expense = 2,000

Utilities Expense = 500

Total Expenses = 4,000

Net Income = 5,000

Assets:

Cash = 6,000

Supplies = 2,000

Equipment = 3,000

Accounts Receivable = 4,000

 Total Assets = 15,000

Liabilities:

(none in this example)

Equity:

Owner’s Capital = 10,000

Net Income = 5,000

 Total Equity = 15,000

Balanced siya: Assets (15,000) = Liabilities + Equity (15,000)