Acct 221 1st Edition Lecture 6 Outline of Last Lecture I Steps in the Accounting Cycle II Deferrals III Examples of Deferrals Outline of Current Lecture I Lab Help and Test Review II Accrual and Deferral Review III Introduction to Chapter 3 a Debits and Credits b Examples Current Lecture Monday Lab Extra Help Wed 8 9 RM ISOM 112 Friday in Flavin 9 10 30 Test Review Tuesday the 17th from 7 8 30pm RM TBA Wednesday the 18th 7 8pm RM ISOM 133 Review of Accruals and Deferrals 1 Acquired Cash from issue of common stock regular 2 Paid dividend to stockholders regular 3 Paid cash on accounts payable regular 4 Incurred other operating expenses on account Accrual 5 Paid cash for rent expenses regular 6 Performed services for cash regular 7 Performed serviced for client on account accrual These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute 8 Collected cash from accounts receivable regular 9 Received cash for services to be performed in the future Deferral 10 Purchased land with cash regular New Things in Chapter 3 Debits Credits Journal Entries Trial Balances Closing Entries Interest Debit Credit Terminology T account Looks like a t drawn on a piece of paper Account title is written across the top On the left under the T represents debits On the right under the T represents credits Debit An account is debited when an amount is written on the left side Credit An account is credited when an amount is written on the right side Each account can be increased or decreased Ex When cash is received the cash account is debited making cash balance increase Ex When cash is paid out the cash account is credited making the ash balance decrease JUST AS ASSETS LIABILITIES OWNERS EQUITY DEBITS MUST ALWAYS CREDITS ASSETS Debit Credit Debit Regular Balance LIBABILITIES Debit Credit Credit Regular Balance EQUITY Debit Credit Credit Regular Balance Accounts under equity Debit Balances Make Equity decrease Expenses Dividends Credit Balances Make Equity increase Common Stock Retained Earnings Revenue Ex Purchased supplies for 500 cash Show the t accounts and debit credit and the Cash Flow Supplies Debit of 500 We gained 500 worth of supplies so supplies increase debit supplies Cash Credit of 500 We paid 500 for supplies so cash decreases credit cash Cash Flow Operating Activity Cash Payments for expenses 500 Total Cash Flow 500 Ex Performed Services on Account Show the t accounts and debit credit and the Cash Flow Accounts Receivable Debit of 7000 We earned 7000 for performing services on account so accounts receivable increases debit accounts receivable Revenue Credit of 7000 We performed services for 7000 so revenue increases credit revenue Cash Flow Did we receive cash for our services NO No Cash Flow Ex Paid 500 on account Show the t accounts and debit credit and the Cash Flow Cash credit of 500 Cash decreased credit cash Account Payable debit of 500 The amount owed in the accounts payable account decreased because we paid 500 of it Cash Flow Operating Activity Cash Payments for Expenses 500 Net Cash Flow 500 Ex Received 800 on account Show the t accounts and debit credit and the Cash Flow Cash debit of 800 Received cash debit cash Account Receivable credit of 800 The amount of cash owed to us accounts receivable has now decreased as we received 800 of that cash owed to us therefore accounts receivable decreases credit accounts receivable