Commercial Subjects Group

Level 2
Subject Accounting (1) – 111 ‫محا‬

Chapter Chapter 3

Title Analyzing and Journalizing Transactions

2021-2020 ‫الفصل الدراسي األول‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Analyzing and Journal Transactions

Learning Objectives
By the end of this lesson, the student should be able to:

Define debits, credits, and the meaning of double

1. entry system.

Identify the basic steps in the recording process.

2.
Explain what a journal is and how it helps in the
3. recording process.
Accounting 1 Analyzing and Journalizing Transactions Acc. 111

An Introduction to the double Entry System

Double Entry
System

Debit Credit

Three Accounts Three Accounts Normal

Normal Balance are Balance are Credit:
Debit:
1-Capital
1-Assets
2- Liabilities
2- Expenses
3- Revenues
3- Drawing
DR CR DR CR

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Activity 1

Determine the normal balance of the following accounts Debit or credit .

…… 3. Wages
1. Equipment ……
2. Capital ……
Payable

5. Fees 4. Account ……
….. ……. 6. Expense
Income Receivable

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journal Transactions Acc. 111

Activity 1: Solution

Determine the normal balance of the following accounts Debit or credit .

Cr. 3. Wages
1. Equipment 2. Capital Cr.
Dr. Payable

5. Fees 4. Account 6. Expense Dr.

Cr. Dr.
Income Receivable

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Activity 2

Determine the rule by placing (√) in the appropriate column:

DEBIT CREDIT

No Accounts Increase/Decrease Debit Credit

1 Capital Increase
2 Office Furniture Increase
3 Premises Decrease
4 Loan Decrease
5 Utilities Expense Increase
6 Rent Revenue Increase
7 Account Payable Decrease
8 Account Receivable Decrease

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Activity 2: Solution

Determine the rule by placing (√) in the appropriate column:

DEBIT CREDIT
No Accounts Increase/Decrease Debit Credit

1 Capital Increase √
2 Office Furniture Increase √
3 Premises Decrease √
4 Loan Decrease √
5 Utilities Expense Increase √
6 Rent Revenue Increase √
7 Account Payable Decrease √
8 Account Receivable Decrease √
‫م‬2020 – ‫وزارة التربية والتعليم‬
Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Identification of Business Documents

Cheque Receipt Invoice/Bill

Cash Purchases or Sales on credit
Cash
‫م‬2020 – ‫وزارة التربية والتعليم‬
Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Recording of Business Transactions in the General Journal

What is the general journal?

DEBIT CREDIT
General journal layout

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Example 1
+ Assets
Assets Debit
A) Investment of Assets: Invested=Deposited=Contributed
DEBIT CREDIT
+ Capital
Capital
Credit

On March, 1 2020, Abdulla invested cash for BD50,000 and equipment for BD10,000 in the
business. It recorded in the general journal:

Date Account Title and Explanation PR Debit Credit

Cash 50,000
March, 1 Equipment 10,000
Abdulla’s Capital 60,000
Invested cash and equipment in the business

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journal Transactions Acc. 111

Example 2
+ Assets
Assets Debit
Purchased (Bought)
B) Purchases Assets Assets Cash - Cash Credit

+ Liability
On Credit
Credit

On March, 3 2020, Abdulla’s Company purchased equipment for BD3000 cash. It

recorded in the general journal:

Date Account Title and Explanation PR Debit Credit

Equipment 3,000
March, 3 Cash 3,000
DEBIT CREDIT
Purchased equipment for cash.

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Example 3

On March, 6 2020, Abdulla’s Company purchased supplies BD2,000 on credit from Ahmed Est. It
recorded in the general journal:
Date Account Title and Explanation PR Debit Credit
supplies 2,000
March, 6 Account Payable (Ahmed) 2,000
Purchased supplies on credit

On March, 8 2020, Abdulla’s Company purchased machine for BD12,000 from Fahad Est. paid
cash BD7,000 and balance on account. It recorded in the general journal:

Date Account Title and Explanation PR Debit Credit

Machine 12,000
Cash 7,000
March, 8
Account Payable (Fahad Est) 5,000
Purchased machine for cash and balance on credit

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Example 4
-Account Payable
-Liability
Debit

C) Payment to Creditor: Paid=Issued Check to Creditor

-Cash
-Assets
Credit

On March, 11 2020, Abdulla’s Company paid cash BD2,000 to creditor Fahad Est. It
recorded in the general journal:

Date Account Title and Explanation PR Debit Credit DEBI CREDI

T T
Account Payable (Fahad Est) 2,000
March, 11 Cash 2,000
Paid cash to creditor.

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Cash + Cash (Debit)

Example 5
On Credit +Account Receivable
Performed=Provided=Completed (Debit)
D) Performing Services Earned=Rendered (Services)

Revenues + Revenues (Credit)

On March, 14 2020, Abdulla’s Company performed services to customer for BD15,000 cash. It recorded in the general
journal:

Date Account Title and Explanation PR Debit Credit

Cash 15,000
March, 14 Services Revenues 15,000
Performing services to customer cash.

On March, 16 2020, Abdulla’s Company provided services to customer Basem for BD9,000 on account. It recorded in the
general journal:

Date Account Title and Explanation PR Debit Credit

Account Receivable (Basem) 9,000
March, 16 Services Revenues 9,000
Performing services to customer cash.

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Example 6
DEBIT CREDIT

On March, 19 2020, Abdulla’s Company provided services to customer Amaar for

BD7,500, received cash BD2,500 and balance on account. It recorded in the general journal:

Date Account Title and Explanation PR Debit Credit

Cash 2,500
March, 19
Account Receivable (Amaar) 5,000
Services Revenues 7,500
Performing services to customer cash.

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Example 7
+Assets +Cash Debit

E) Receiving from Debtors Received Cash from Customer = Debtors=Account

Receivable
(Account Receivable): -Account
-Assets Receivable
(Credit)

On March, 23 2020, Abdulla’s Company received cash BD4,000 from customer

Amaar. It recorded in the general journal:

Date Account Title and Explanation PR Debit Credit

Cash 4,000
March, 23 Account Receivable (Amaar) 4,000
Receiving cash from debtors.

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Example 8
Expenses + Expenses Debit

E) Incurred Expenses Incurred Expenses

Cash - Cash Credit

On Credit + Liability Credit

On March, 24 2020, Abdulla’s Company paid cash BD1,800 for salaries expenses. It recorded in the general journal:

Date Account Title and Explanation PR Debit Credit

Salaries Expenses 1,800
March, 24 Cash 1,800
Paid salaries expenses for cash.

On March, 26 2020, Abdulla’s Company incurred advertising expenses BD600 on account. It recorded in the general journal:

Date Account Title and Explanation PR Debit Credit

Advertising Expenses 600
March, 26 Account Payable 600
Incurred advertising expenses on credit.

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

+ Prepaid Expenses
Example 9 +Assets (Debit)

Paid in advance for next period

G) (Prepaid Expenses) -Cash
- Assets
(Credit)

On March, 27 2020, Abdulla’s Company paid BD3,500 cash for a two years’ insurance
policy on machines. It recorded in the general journal:

Date Account Title and Explanation PR Debit Credit

Prepaid Insurance 3,500

March, 27
Cash 3,500

Paid cash in advance for insurance.

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Example 10
+Assets Cash (Debit)
H) (Receiving Revenues in
Advance) Receiving Revenues in Advance
Unearned
+Liability
Revenues (Credit)

On March, 28 2020, Abdulla’s Company received BD4,100 cash advance for

services for next three months. It recorded in the general journal: :

Date Account Title and Explanation PR Debit Credit

Cash 4,100
March, 28
Unearned Services Revenues 4,100

Receive services revenues in advance.

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Example 11
Drawings (Debit)
+ Drawings

I) Drawings Withdrew for personal use

- Cash Cash (Credit)

On March, 30 2020, Abdulla’s Company withdrew BD600 cash for personal use
(private use). It recorded in the general journal:

Date Account Title and Explanation PR Debit Credit

Drawings 600
March, 30
Cash 600
Withdrew cash for personal use.

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Activity 4

Record the following transactions in the General Journal.

May 03, Issued receipt #215 for services performed BD 20,000.

Date Account name Debit Credit

May 06, Purchased equipment for BD 600 by cheque#1247.

DEBIT CREDIT
Date Account name Debit Credit

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Activity 4: Solution

Record the following transactions in the General Journal

May 03, Issued receipt #215 for services performed BD 20,000.

Date Account Title and Explanation Debit Credit

Cash 20,000
May 03
Service Revenue 20,000

May 06, Purchased equipment for BD 600 by cheque#1247.

Date Account Title and Explanation Debit Credit

Equipment 600
May 06
Cash 600

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Activity 5

Record the following transactions in the General Journal.

1- May 07, Issued check #234 for BD 1,500 to creditor.

Date Account Title and Explanation Debit Credit
Creditor (A/C PAYABLE )

DEBIT CREDIT
2- May 09, Received check #1239 for BD 3,200 from Debtors.

Date Account Title and Explanation Debit Credit

Debtors (A/C RECEIVABLE)

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Activity 5: Solution

Record the following transactions in the General Journal.

1- May 07, Issued check #234 for BD 1,500 to creditor

Date Account Title and Explanation Debit Credit

Creditor (A/C PAYABLE )
Account Payable 1,500
May 07
Cash 1,500

2- May 09, Received check #1239 for BD3,200 from Debtors

Date Account Title and Explanation Debit Credit

Debtors (A/C RECEIVABLE)
Cash 3,200
May 09
Account Receivable 3,200

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Activity 6

Record the following transactions in the General Journal.

May 11, Issued receipt #78 to Salman for services, BD 100.

Date Account Title and Explanation Debit Credit Receipt

Issued Receipt- Receive cash

May 13, Received receipt #90 from Salman for buying supplies , BD 100.
DEBIT CREDIT
Date Account Title and Explanation Debit Credit

Receive Receipt – Pay cash

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Activity 6: Solution

Record the following transactions in the General Journal.

May 11, Issued receipt #78 to Salman for services performed, BD 700

Date Account Title and Explanation Debit Credit Receipt

Cash 700
May 11
Services Revenues 700 Issued Receipt- Receive cash

May 13, Received receipt #90 from Salman for buying supplies , BD 300.

Date Account Title and Explanation Debit Credit

Supplies 300
May 13
Cash 300 Receive Receipt – Pay cash

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journal Transactions Acc. 111

Activity 7

Record the following transactions in the General Journal

May 23, Issued invoice/bill #22 to Jasim for services provided BD1,400.
Invoice/Bill
Date Account Title and Explanation Debit Credit

Issued/sent an invoice- Receivable

May 27, Received invoice/bill #54 for buying furniture BD 3,000

DEBIT CREDIT
Date Account Title and Explanation Debit Credit

Received invoice/bill- Payable

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Activity 7: Solution

Record the following transactions in the General Journal.

May 23, Issued invoice/bill #22 to Jasim for services provided BD2,400.

Date Account Title and Explanation Debit Credit Invoice/Bill

Account Receivable 2,400
May 23 Issued/sent an invoice-
Services Revenues 2,400
Receivable

May 27, Received invoice/bill #54 for buying furniture BD 3,000.

Date Account Title and Explanation Debit Credit

Furniture 3,000
May 27
Account Payable 3,000 Received invoice/bill-
Payable

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Date Explanation Dr Cr
Activity 8

Required:
Prepare the necessary journal entries.

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

Date Explanation Dr Cr
Activity 8: Solution
June
Cash 50,000
01 Capital 50,000
Equipment 1,700
June
06 Cash 1,700
Cash 540
June
10 Services Revenues 540
Rent Expense 500
June
15 Cash 500
June
No Entry
18
Supplies 420
June
24 Account Payable 420
Furniture 2,300
Any transaction including June
26 Account Payable
( Hired – Ordered - Decided) 2,300

No Entry June
No Entry
28

‫م‬2020 – ‫وزارة التربية والتعليم‬

Accounting 1 Analyzing and Journalizing Transactions Acc. 111

End of Lesson

The student achieved the objectives:

• Define debits, credits, and the meaning of double entry system.

• Identify the basic steps in the recording process.
• Explain what a journal is and how it helps in the recording
process.

:‫لمزيد من المعلومات‬

www.Edunet.com ‫ زيارة البوابة التعليمية‬-1

.‫ حل أسئلة وأنشطة الكتاب المدرسي‬-2

‫م‬2020 – ‫وزارة التربية والتعليم‬