Chapter 4 Debit and Credit Theory The 7

Chapter 4 Debit and Credit Theory The 7 Transactions – Pacific Trucking 1 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition 4

Debit and Credit Theory This tutorial guides you through classifying various transactions using Debit and Credit Theory. The first few slides (3 – 9) go over Debit & Credit Theory. The bulk of the ppt. goes through Pacific Trucking’s 7 Transactions. Click on one of the following to skip directly to one of the transactions: Transaction 1 Transaction 2 Transactions completed via: Transaction 3 1) T-Accounts Transaction 4 2) Double Entry System of Accounting Transaction 5 3) Transactional Analysis Sheet Transaction 6 Transaction 7 The last few slides provide a summary using the T-Account (Double Entry System) of Accounting. 2 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory When viewed in T-account form, all accounts have a left and a right side. 3 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory The word Debit is associated with the left side. 4 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory The word Credit is associated with the right side. 5 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Assets, Liabilities, and Owner’s Equity accounts have their own debit and credit rules. 6 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Asset accounts are on the left of the balance sheet, so their beginning value is a debit, and a debit increases their account balance. 7 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Liability and Owner’s Equity accounts are on the right of the balance sheet, so their beginning value is a credit, and a credit increases their account balance. 8 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Remember, assets behave opposite from liabilities and owner’s equity because they are on different sides of the balance sheet. 9 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. 10 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. 11 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. 12 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. 13 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. 14 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. 15 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. 16 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. 17 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. 18 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. 19 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. 20 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. 21 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. 22 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. 23 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. 24 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. 25 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. 26 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. 27 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. 28 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. 29 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. 30 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. 31 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 3: The company receives $200 cash from R. Van Loon in partial payment of her debt. 32 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 3: The company receives $200 cash from R. Van Loon in partial payment of her debt. 33 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 3: The company receives $200 cash from R. Van Loon in partial payment of her debt. 34 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 3: The company receives $200 cash from R. Van Loon in partial payment of her debt. 35 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 3: The company receives $200 cash from R. Van Loon in partial payment of her debt. 36 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 3: The company receives $200 cash from R. Van Loon in partial payment of her debt. 37 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 3: The company receives $200 cash from R. Van Loon in partial payment of her debt. 38 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 3: The company receives $200 cash from R. Van Loon in partial payment of her debt. 39 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 3: The company receives $200 cash from R. Van Loon in partial payment of her debt. 40 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 3: The company receives $200 cash from R. Van Loon in partial payment of her debt. 41 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 3; The company receives $200 cash from R. Van Loon in partial payment of her debt. 42 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 4: A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 43 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 4: A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 44 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 4: A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 45 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 4: A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 46 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 4: A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 47 Chapter 4 – Debit and Credit Theory | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 4: A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 48 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 4: A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 49 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 4; A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 50 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 4: A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 51 Chapter 4 – Debit and Credit Theory l 00/00/00 | Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 4: A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 52 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 4: A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 53 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 54 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 55 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 56 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 57 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 58 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 59 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 60 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 61 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 62 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 63 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 64 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. 65 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 6: A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. 66 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 6: A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. 67 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 6: A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. 68 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 6: A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. 69 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 6: A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. 70 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 6: A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. 71 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 6: A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. 72 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 6; A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. 73 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 6: A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. 74 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 6: A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. 75 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 6: A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. 76 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 77 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 78 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 79 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 80 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 81 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 82 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 83 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 84 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 85 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 86 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 87 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition

Debit and Credit Theory Summary: List of all transactions. Transaction 1: The company purchases $200 worth of supplies from Packham Products, to be paid for later. Transaction 2: The company pays $500 to Dini Bros. in partial payment of the amount owed to them. Transaction 3: The company receives $200 cash from R. Van Loon in partial payment of her debt. Transaction 4: A delivery service is provided for a customer at a price of $400. The customer pays cash at the time the service is completed. 88 Presentation Title runs here l 00/00/00

Debit and Credit Theory Summary: List of all transactions. Transaction 5: A used truck costing $8000 is purchased from Dini Bros. A cash down payment of $2500 is made at the time of the purchase and the balance is to be paid at a later date. Transaction 6: A delivery service is completed for R. Van Loon at a price of $350. Van Loon does not pay for the service at the time it is provided, but agrees to pay within 30 days. Transaction 7: One of the lifting machines (part of Equipment) breaks down. The company spends $650 cash to have the machine repaired. 89 Presentation Title runs here l 00/00/00

Debit and Credit Theory Summary: Transactional effect on T-Accounts. 90 Chapter 4 – Debit and Credit Theory l Accounting 1, 7 th Edition