Chapter 1 · Journal Entries
Every financial statement begins with a journal entry. Master this step and the rest of the accounting cycle follows. Work through the five problems below, then practice with unlimited AI-graded exercises.
Business Scenario
On March 1, Maria opens a bookkeeping business and deposits $25,000 of her own money into the business bank account.
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| Mar 1 | Cash | 25,000 | |
| Owner's Capital | 25,000 |
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.
Business Scenario
On March 4, the business buys $1,800 of office supplies from a supplier, to be paid next month.
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| Mar 4 | Supplies | 1,800 | |
| Accounts Payable | 1,800 |
Supplies (asset) up, debit. Nothing was paid yet, so the obligation lives in Accounts Payable (liability), credit. No cash moves until next month.
Business Scenario
On March 10, the business completes a $6,000 bookkeeping project. The client pays $3,000 today and will pay the rest in 30 days.
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| Mar 10 | Cash | 3,000 | |
| Accounts Receivable | 3,000 | ||
| Service Revenue | 6,000 |
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.
Business Scenario
On March 18, the business pays the $1,800 owed from Problem 2.
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| Mar 18 | Accounts Payable | 1,800 | |
| Cash | 1,800 |
The liability is settled, so debit Accounts Payable to remove it. Cash leaves, credit. Note what does NOT appear: no expense — the expense logic belongs to using the supplies, not paying the bill.
Business Scenario
On March 31, Maria withdraws $2,000 for personal use, and pays $1,200 rent for March and $300 for the month's utilities with one check of $1,500.
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| Entry 1 | |||
| Mar 31 | Owner's Withdrawals | 2,000 | |
| Cash | 2,000 | ||
| Entry 2 | |||
| Mar 31 | Rent Expense | 1,200 | |
| Utilities Expense | 300 | ||
| Cash | 1,500 | ||
A withdrawal is never an expense — it reduces equity through Withdrawals. The compound entry shows two expenses sharing one credit to Cash; total debits (1,500) still equal the credit.
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Chapter 1 at Easy difficulty is free and fully graded. A fresh scenario every time, no account needed.
Every exercise on iLove-Accounting.com is generated fresh and graded with specific feedback — journal entries through cash flow statements. One cycle. Seven easy steps. The exams take care of themselves.