Foundation
Financial Statements
Chapter 1
Journal Entry Practice
Read the business scenario, then record each transaction in the General Journal below.
Reference
Normal Balances — Debit vs Credit
Which side increases each account type
Your Progress
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Worked Examples
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1EasyProblem 1: Owner investment
Business Scenario
On March 1, Maria opens a bookkeeping business and deposits $25,000 of her own money into the business bank account.
Solution
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| Mar 1 | Cash | 25,000 | |
| Owner's Capital | 25,000 |
Why
Cash (an asset) increases, so it is debited. The owner's claim on the business increases, so Owner's Capital is credited. Assets = Liabilities + Equity stays balanced: both sides grew by $25,000.
2EasyProblem 2: Buying supplies on account
Business Scenario
On March 4, the business buys $1,800 of office supplies from a supplier, to be paid next month.
Solution
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| Mar 4 | Supplies | 1,800 | |
| Accounts Payable | 1,800 |
Why
Supplies (asset) up, debit. Nothing was paid yet, so the obligation lives in Accounts Payable (liability), credit. No cash moves until next month.
3MediumProblem 3: Revenue earned, half collected
Business Scenario
On March 10, the business completes a $6,000 bookkeeping project. The client pays $3,000 today and will pay the rest in 30 days.
Solution
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| Mar 10 | Cash | 3,000 | |
| Accounts Receivable | 3,000 | ||
| Service Revenue | 6,000 |
Why
Revenue is recorded when EARNED, not when collected. The earned $6,000 is credited in full; the two debits show where it sits — half in cash, half as a receivable.