Page 89 - Accounting Principles (A Business Perspective)

2. Recording business transactions

Next, observe Exhibit 12, the three-column general ledger accounts of MicroTrain Company after the journal
entries have been posted. Each ledger account would appear on a separate page in the ledger. Trace the postings
from the general journal to the general ledger to make sure you know how to post journal entries.

All the journal entries illustrated so far have involved one debit and one credit; these journal entries are called
simple journal entries. Many business transactions, however, affect more than two accounts. The journal entry
for these transactions involves more than one debit and/or credit. Such journal entries are called compound
journal entries.
As an illustration of a compound journal entry, assume that on 2011 January 2, MicroTrain Company purchased
USD 8,000 of training equipment from Wilson Company. See below.

MICROTRAIN COMPANY
General Ledger

Cash
Account No. 100
Date Explanation Post Debit Credit Balance
Ref.
2010 Dec. 1 Beginning balance* 5 0 0 0 0 Dr
1 Trucks G1 4 0 0 0 0 1 0 0 0 0 Dr
1 Prepaid insurance G1 2 4 0 0 7 6 0 0 Dr
1 Prepaid rent G1 1 2 0 0 6 4 0 0 Dr
7 Unearned service fees G1 4 5 0 0 1 0 9 0 0 Dr
15 Service revenue G1 5 0 0 0 1 5 9 0 0 Dr
17 Paid account payable G1 1 4 0 0 1 4 5 0 0 Dr
26 Collected account receivable G2 5 0 0 1 5 0 0 0 Dr
28 Salaries G2 3 6 0 0 1 1 4 0 0 Dr
29 Utilities G2 1 5 0 1 1 2 5 0 Dr
31 Dividends G2 3 0 0 0 8 2 5 0 Dr

Accounts Receivable Account No. 103

Date Explanation Post Debit Credit Balance
Ref.
2010 Dec. 20 Service revenue G2 5 7 0 0 5 7 0 0 Dr
26 Collections G2 5 0 0 5 2 0 0 Dr

Supplies on Hand Account No. 107

Date Explanation Post Debit Credit Balance
Ref.
2010 Dec. 4 Purchased on account G1 1 4 0 0 1 4 0 0 Dr

Prepaid Insurance Account No. 108
Date Explanation Post Debit Credit Balance
Ref.
2010 Dec. 1 One-year policy on trucks G1 2 4 0 0 2 4 0 0 Dr

General Ledger Page 1
Prepaid Rent Account No. 112
Date Explanation Post Debit Credit Balance
Ref.
2010 Dec. 1 Three-month payment G1 1 2 0 0 1 2 0 0 Dr

Trucks Account No. 150

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