1 book-keeping dr[1]. & cr.

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Book Keeping

Book-Keeping For SSNN Ltd.

Amit Shrivastava

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Book-keeping : -is the recording of all financial transactions undertaken by

an individual or organization -The organization may be a business, a charitable

organization ,utility service sector or even a local sports club.

-Bookkeeping is "keeping records of what is bought, sold,

owed, and owned; what money comes in, what goes out, and what is left."

-A financial transaction is any event that involves money. -Individual and family book-keeping involves keeping track

of income and expenses in a cash account record, checking account register, or savings account passbook

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-Two common book-keeping methods used by businesses and other organizations are the single-entry book-keeping system and the double-entry book-keeping system.

-Single-entry systems are used in the interest of simplicity. They are usually less expensive to maintain than double-entry systems because they do not require the services of a trained person.

-Single-entry systems are usually inadequate except where operations are especially simple and the volume of activity.

-Double-entry bookkeeping requires posting (recording) each transaction twice, using debits and credits.

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Double-Entry AccountingDouble-Entry AccountingDouble-Entry AccountingDouble-Entry Accounting

“ Double-entry accounting is based on a

simple concept: each party in a business

transaction will receive something and give

something in return. In bookkeeping terms,

what is received is a debit or X and what is

given is a credit or Y. The T account is a

representation of a scale or balance.”

Scale or Balance

ReceiveDEBIT

GiveCREDIT

T account

Left SideReceiveDEBIT

Right SideGive

CREDIT

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SSNN Ltd.SSNN Ltd.SSNN Ltd.SSNN Ltd.

“ On November 1, 2005, Arun started a project

called SSNN Ltd. . Arun plan to use his

knowledge of microcomputers and offer

computer consulting services for a fee. The

following double-entry transactions show how

amounts received (debits or X) always equal

amounts given (credits or Y).”

Arun is Owner

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Business Transactions Business Transactions

General Journal

receiveDebit

giveCredit

SSNN ltd.(investee)

X (investor)

giveCredit

Entry A.

Date Description Debit Credit

11/1

Arun deposits $ 25,000 in a bank account for SSNN ltd. in exchange for Shares.

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Arun deposits $25,000 in a bank account for SSNNL in exchange for Share Capital.

Business TransactionsBusiness Transactions

General Journal

receiveDebit

giveCredit

SSNNL(investee)

Cash

X (investor)

giveCredit

Entry A.


11/1 Cash 25,000

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General Journal


11/1 Cash 25,000 Shares 25,000

receiveDebit

giveCredit

SSNNL(investee)

Cash CapitalStock

X (investor)

giveCredit

Entry A.

Arun started project SSNNL from cash of Rs. 25,000

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SSNNL buys land for $20,000.


receiveDebit

giveCredit

SSNNL(buyer)

Land Owner (seller)

giveCredit

Entry B.

General Journal


11/5

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receiveDebit

giveCredit

SSNNL(buyer)

Land

Land Owner (seller)

giveCredit

Entry B.

General Journal


11/5 Land 20,000

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receiveDebit

giveCredit

SSNNL (buyer)

Land Cash

Land Owner (seller)

giveCredit

Entry B.

General Journal


11/5 Land 20,000 Cash 20,000

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SSNNL buys supply / goods for $1,350, agreeing to pay in the near future.**


receiveDebit

giveCredit

SSNNL(buyer)

Supplier (seller)

giveCredit

Entry C.

General Journal


11/10

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SSNNL buys supplies for $1,350, agreeing to pay in the near future.**


receiveDebit

giveCredit

SSNNL(buyer)

Supplies

Supplier (seller)

giveCredit

Entry C.

General Journal


11/10 Supplies/goods 1,350

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SSNNL buys supplies for $1,350, agreeing to pay in the near future.**


receiveDebit

giveCredit

SSNNL(buyer)

Supplies

Supplier (seller)

giveCredit

Entry C.

A promiseto pay later

General Journal


11/10 Supplies 1,350 Accounts Payable 1,350

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SSNNL earns fees of $7,500, receiving cash.


receiveDebit

giveCredit

SSNNL(seller)

Customer (buyer)

giveCredit

Entry D.

General Journal


11/18

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receiveDebit

giveCredit

SSNNL(seller)

Cash

Customer (buyer)

giveCredit

Entry D.

General Journal


11/18 Cash 7,500

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receiveDebit

giveCredit

SSNNL(seller)

Cash

Customer (buyer)

giveCredit

Entry D.

Services

General Journal


11/18 Cash 7,500 Fees Earned 7,500

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SSNNL paid: wages, $2,125; rent, $800; utilities, $450; and miscellaneous, $275.


General Journal

receiveDebit

giveCredit

SSNNL(buyer)

Various suppliers

giveCredit

Entry E.

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11/18 Wages Expense 2,125Rent Expense 800Utilities Expense 450Misc. Expense 275



General Journal

receiveDebit

giveCredit

SSNNL(buyer)

Services,benefits

Various suppliers

giveCredit

Entry E.

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11/18 Wages Expense 2,125Rent Expense 800Utilities Expense 450Misc. Expense 275 Cash 3,650



General Journal

receiveDebit

giveCredit

SSNNL(buyer)

Services,benefits

Various suppliers

giveCredit

Entry E.

Cash

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SSNNL pays $950 to creditors on account.


receiveDebit

giveCredit

SSNNL(payor)

Supplier (payee)

giveCredit

Entry F.

General Journal


11/30

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receiveDebit

giveCredit

SSNNL(payor)

Reduction in obligation

Supplier (payee)

giveCredit

Entry F.

General Journal


11/30 Accounts Payable 950

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receiveDebit

giveCredit

SSNNL(payor)


Supplier (payee)

giveCredit

Entry F.

Cash

General Journal


11/30 Accounts Payable 950 Cash 950

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At the end of the month, the cost of supplies/goods on

hand is $550.**


receiveDebit

giveCredit

SSNNL(user)

Internal Transaction

(no external entity)

giveCredit

Entry G.

General Journal


11/30

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At the end of the month, the cost of supplies/goods on hand is $550.**


receiveDebit

giveCredit

SSNNL(user)

Use of supplies



giveCredit

Entry G.

General Journal

Balance of Supplies account $1,350 less $550 on hand = $800 used


11/30 Supplies Expense 800

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At the end of the month, the cost of supplies/goods on hand is $550.**


receiveDebit

giveCredit

SSNNL(user)

Use of supplies



giveCredit

Entry G.

Supplies

General Journal


11/30 Supplies Expense 800 Supplies 800

Balance of Supplies account $1,350 less $550 on hand = $800 used

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SSNNL paid dividends of $2,000.


receiveDebit

giveCredit

SSNNL(payer)

X (stockholder)

giveCredit

Entry H.

General Journal


11/30

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receiveDebit

giveCredit

SSNNL(payer)

Reduction in equity

X (stockholder)

giveCredit

Entry H.

General Journal


11/30 Dividends 2,000


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receiveDebit

giveCredit

SSNNL(payer)


X (stockholder)

giveCredit

Entry H.

Cash

General Journal


11/30 Dividends 2,000 Cash 2,000


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Post. Date Description Ref. Debit Credit

12/1 Prepaid Insurance 2,400 Cash 2,400

General Journal Page 1

Recording and Posting an EntryRecording and Posting an Entry

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Post. BalanceDate Item Ref. Debit Credit Debit Credit

12/1

Account: Prepaid Insurance Account No. 15

General Journal

General Ledger

Page 1


1

1 Enter the transaction date in the ledger account.

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12/1 1 2,400


General Journal

General Ledger

Page 1


2

2 Enter the debit amount in the ledger debit column.

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12/1 1 2,400 2,400


General Journal

General Ledger

Page 1


3

3 Update the ledger account balance.

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12/1 1


General Journal

General Ledger

Page 1


4

4 Enter the journal page in the ledger account.

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12/1 Prepaid Insurance 15 2,400 Cash 2,400


12/1 1 2,400 2,400


General Journal

General Ledger

Page 1


5

5 Enter the ledger account number in the journal.

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12/1 Prepaid Insurance 15 2,400 Cash 11 2,400


11/30 Balance 5,90012/1 1 2,400 3,500

Account: Cash Account No. 11

General Journal

General Ledger

Page 1

1 5 2

3

4

All five parts of the credit posting are shown.

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Correcting ErrorsCorrecting Errors

Three Types of ErrorsJournal EntryJournal Entry Ledger PostingLedger Posting Correction ProcedureCorrection Procedure

1. incorrect not posted correct Journal

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Correcting ErrorsCorrecting Errors

Three Types of ErrorsJournal EntryJournal Entry Ledger PostingLedger Posting Correction ProcedureCorrection Procedure

1. incorrect not posted correct Journal

2. correct incorrectly posted correct Ledger

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SSNNLTrial Balance

November 30, 2002

11 Cash 5,90014 Supplies 55017 Land 20,00021 Accounts Payable 40031 Capital Stock 25,00033 Dividends 2,00041 Fees Earned 7,50051 Wages Expense 2,12552 Rent Expense 80054 Utilities Expense 45055 Supplies Expense 80059 Miscellaneous Expense 275

32,900 32,900

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SSNNLTrial Balance

November 30, 2002

11 Cash 5,90014 Supplies 55017 Land 20,00021 Accounts Payable 40031 Share Capital 25,00033 Dividends 2,00041 Fees Earned 7,50051 Wages Expense 2,12552 Rent Expense 80054 Utilities Expense 45055 Supplies Expense 80059 Miscellaneous Expense 275

32,900 32,900

BalanceSheet

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IncomeStatement

SSNNLTrial Balance

November 30, 2002

11 Cash 5,90014 Supplies 55017 Land 20,00021 Accounts Payable 40031 Capital Stock 25,00033 Dividends 2,00041 Fees Earned 7,50051 Wages Expense 2,12552 Rent Expense 80054 Utilities Expense 45055 Supplies Expense 80059 Miscellaneous Expense 275

32,900 32,900

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SSNNLChart of Accounts

Balance Sheet Income Statement1. Assets11 Cash12 Accounts Receivable14 Supplies15 Prepaid Insurance17 Land18 Office Equipment

2. Liabilities21 Accounts Payable23 Unearned Rent

3. Owner’s Equity31 Capital Stock32 Retained Earnings33 Dividends

4. Revenue41 Fees Earned

5. Expenses51 Wages Expense52 Rent Expense54 Utilities Expense55 Supplies Expense59 Miscellaneous

Expense

1 book-keeping dr[1]. & cr.

Economy & Finance

Transcript of 1 book-keeping dr[1]. & cr.