How would I record the following transactions into a "T" account?
This information relates to Pickert Real Estate Agency.
Oct. 1
Stockholders invest $30,000 in exchange for common stock of the corporation.
2
Hires an administrative assistant at an annual salary of $42,000.
3
Buys office furniture for $4,600, on account.
6
Sells a house and lot for M.E. Petty; commissions due from Petty, $10,800 (not paid by Petty at this time).
10
Receives cash of $140 as commission for acting as rental agent renting an apartment.
27
Pays $700 on account for the office furniture purchased on October 3.
30
Pays the administrative assistant $3,500 in salary for October.
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To record the given transactions into a "T" account, you will need to understand the basic principles of double-entry bookkeeping.
A "T" account is a simplified form of a general ledger account. It consists of two sides: the left side (debit) and the right side (credit). Each side represents either an increase (+) or decrease (-) in the account balance. Debits are typically recorded on the left side, while credits are recorded on the right side. Here's how to record each transaction:
1. Stockholders invest $30,000 in exchange for common stock of the corporation.
- Debit the "Cash" account for $30,000 on the left side.
- Credit the "Common Stock" account for $30,000 on the right side.
2. Hires an administrative assistant at an annual salary of $42,000.
- Debit the "Salary Expense" account for $42,000 on the left side.
- Credit the "Cash" account for $42,000 on the right side.
3. Buys office furniture for $4,600, on account.
- Debit the "Office Furniture" account for $4,600 on the left side.
- Credit the "Accounts Payable" account for $4,600 on the right side.
6. Sells a house and lot for M.E. Petty; commissions due from Petty, $10,800 (not paid by Petty at this time).
- Debit the "Accounts Receivable" account for $10,800 on the left side.
- Credit the "Commission Revenue" account for $10,800 on the right side.
10. Receives cash of $140 as a commission for acting as a rental agent renting an apartment.
- Debit the "Cash" account for $140 on the left side.
- Credit the "Commission Revenue" account for $140 on the right side.
27. Pays $700 on account for the office furniture purchased on October 3.
- Debit the "Accounts Payable" account for $700 on the left side.
- Credit the "Cash" account for $700 on the right side.
30. Pays the administrative assistant $3,500 in salary for October.
- Debit the "Salary Expense" account for $3,500 on the left side.
- Credit the "Cash" account for $3,500 on the right side.
Remember, when recording transactions in a "T" account, each debit must have an equal and opposite credit. The debits and credits should always balance.