T-Accounts

Recording Accounting Transactions Using T-Accounts- Examples below. Paid users get them all. To illustrate the debiting and crediting of accounts, please review the transactions of John F. Smith, a sole proprietor, doing business as XYZ Company. Please analyze each transaction to see what increases and decreases occurred, and observe the debit and credit entries which record these increases and decreases. T-Accounts are being used and only the amounts of debits and credits are shown. As stated earlier the asset accounts and expense accounts are shown at the left; liability, owner's equity and revenue accounts are shown at the right. 1) Merchandise was sold to a customer for $5,900 on account. The accounts receivable asset is increased because the customer owes the company for the merchandise it received - debit accounts receivable. The revenue account is increased because the company generated sales of $5,900 by selling merchandise to a customer - credit sales.    Accounts Receivable      $5900                             Sales                     $5900         2) John F. Smith contributed capital of $5,000 for working capital. The cash asset is increased because cash was put into the business by the sole proprietor - debit cash. The owners' equity is increased because John F. Smith contributed $5,000 in working capital to his business - credit capital.    Cash      $5000                           John F. Smith, Capital                       $5000         T-Account Example Supplies Expense Debit   Credit $5,000.00   Accounts Payable Debit   Credit   $5,000.00 Accounts Payable Supplies expense is debited because the entity purchased supplies. Accounts payable is credited because the supplies were purchased on account (charged).   T-Account Example Accounts Receivable Debit   Credit $25,000.00   Sales Debit   Credit   $25,000.00 Accounts Receivable Accounts receivable is debited because the asset accounts receivable increased due to the customer charging on her account for the merchandise she received. Sales is credited because the entity earned income.   T-Account Example Depreciation Expense Debit   Credit $2,000.00   Accumulated Depreciation Debit   Credit   $2,000.00 Accumulated Depreciation Depreciation expense is debited because it is an expense of the entity. Accumulated depreciation is credited because it is a contra asset to fixed assets. The accumulated depreciation account reduces the book value of the fixed assets. Preview Home