DATE : 22nd May 2020
TO: Mr. Moe Lawner
FROM: Accountant, Moe’s Landscaping Company
SUBJECT: Explanation of the Steps in the Recording Process for the March 15 Transactions
The transactions on March 15 involved $6,600 sent to customers and $2,200 paid in salaries to employees. The following explanation illustrates the steps undertaken to record each of the transactions.
|
Step |
Illustration |
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| Transaction | Bills that were totaling $6,600 were sent to customers on March 15. | ||||||||||
| Basic Analysis | The asset account Accounts Receivables increases by $6,600 and the revenue account which is the Service Revenue decreases by $6,600. | ||||||||||
| Equation Analysis |
|
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| Debit-Credit Analysis | Debit results in an increase in expenses hence debit account receivable $6,600. Credit results in a decrease in assets hence credit Service Revenue $6,600. | ||||||||||
| Journal Entry |
|
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| Post to Ledger |
|
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|
Cash Flows +$6,600 |
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|
Step |
Illustration |
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| Transaction | Bills totaling $2,200 were paid in salaries to employees on March 15. | ||||||||||
| Basic Analysis | The expenses account Salaries and Wages expenses increases by $2200 and the asset Cash account decreases by $2,200. | ||||||||||
| Equation Analysis |
|
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| Debit-Credit Analysis | Debit results in an increase in expenses hence debit salaries and wage expense $2200. Credit results in a decrease in assets hence credit Cash $2200. | ||||||||||
| Journal Entry |
|
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| Post to Ledger |
|
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|
Cash Flows - $2,200 |
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Regards,
Accountant
Accountant, Moe’s Landscaping Company.
