2. Checklist of a proper journal entry:
• The first thing to remember is
how debits and credits affect
each type of account.
3. • Assets • Liabilities
• Withdrawals • Capital
• Expenses • Revenues
• All are increased • All are increased
when debited when credited
• All are decreased • All are decreased
when credited when debited
4. Second
• The second thing to keep in mind
is that the debits must EQUAL the
credits in every entry.
5. Third
• All accounts being debited go
first. The credits are underneath,
slightly indented.
6. Finally
• As a general rule, debit what the
company gets, credit what the
company gives.
• Turn to page 79 of your textbook,
and use exercise 2-7 as an example
7. When Kasey invests cash and equipment in the company, the
company is getting cash and equipment, those will be
debited. Since cash and equipment are both assets they will
increase.
Date Account Name Debit Credit
8/1 Cash(Asset) 7500
Equipment(Asset) 32500
Capital(Capital) 40000
After you have all of your debits complete, you need your
credit. Since Kasey is getting capital in the company her
capital account needs to be credited.
8. On August 2, when the company buys a 24 month insurance
policy, the company is getting a prepaid policy, and giving up cash.
The journal entry will look like this:
Date Account Name Debit Credit
8/2 Prepaid Insurance(Asset) 3000
Cash (Asset) 3000
9. The remaining three entries will look like this:
Date Account Name Debit Credit
8/5 Supplies(Asset) 3000
Cash(Asset) 3000
8/20 Cash(Asset) 2650
Service Revenue 2650
8/31 Utilities Expense 875
Cash 875
