First Example

The company started business on June 6, 2013. The business was started with $300,000. The transactions they
engaged in during their first month of business are below: cash increase will be dr and capital increase will cr

Date Transaction
An amount of $10,000 was paid for June rent. Increase in exp dr and
June 8 decrease in asset (cash) cr
Equipment costing $100,000 was purchased using $40,000 cash. The
remaining amount of $60,000 is a one year note with an interest rate of
June 9 3.4% PPE 100,000Dr, cash 40,000 cr, notepayble 60,000 cr
June 10 Purchases costing totaling $25,000 on account. Pur dr and a/p cr Sales 63,900
Received $39,400 in cash for services rendered to customers. Cash dr
June 16 and sales cr
June 16 Paid the account for Purchases purchased June 10. a/p dr and cash cr
$63,900 worth of services were given to customers. Received cash 43,700 cash
amount of $43,700. Customers promised to pay remaining amount of 20,200 on a/c
June 20 $20,200. cash dr (43700), a/r dr (20,200)and sale cr 63,900
Paid employees’ wages for June 8-June 21. Wages totaled $23,500.
June 21 Wages dr and cash cr
Received $20,200 in cash for services rendered to customers on June 20.
June 21 Cash dr and a/r cr
Received $6,300 in cash as advanced payment from customers.cash dr
June 22 and unearned income cr
June 27 Purchases costing totaling $3,500 on account. Pur dr and a/p cr
June 28 Electricity bill received totaling $1,850. L&H dr and L&H p/a cr
June 28 Phone bill received totaling $2,650. Utilities exp dr and utilities p/a cr
Miscellaneous expenses totaled $4,320. Mics exp dr and cash cr
June 28 0r Misc exp dr and Misc exp p/a cr

Second Example

This company was incorporated on March 1, 2013 with a starting of $1,500,000 and 10,000 common stock shares
at $50 par value. These are the company’s transactions for the first month:

Cash a/c 1500,000 DR

Share capital (10,000* $50) 500,000 Cr Par value 50

Share premium a/c 1000,000 cr M.V $1500,000/10000= 150

Extra = $100 s.p

Date Transaction
March 3 $60,000 were paid as rent for march.
March 4 Purchases were purchased on account totaling $35,000.
March 6 Services were provided to customers, and the company received $54,000 in cash.
March 7 The accounts payable for Purchases purchased on March 4 was paid.
$200,000 in cash was used to purchase equipment costing $560,000. The remaining $360,000 became
March 7 a one year note payable with interest rate of 4%.
March 9 Purchases were purchased on account totaling $13,500.
March 12 Services were provided to customers, and the company received $43,500 in cash.
March 13 The accounts payable for Purchases purchased on March 9 was paid.
March 14 Employees were paid wages for March 3-March 14 totaling $356,000.
Services were provided to customers totaling $256,000. Customers paid $143,000 with a promise to
March 14 pay $113,000 remaining balance in the future.
March 20 Purchases were purchased on account totaling $5,400.
March 21 Customers paid $100,000 toward the $113,000 remaining balance for services rendered March 14.
March 23 The accounts payable for Purchases purchased on March 20 was paid.
March 25 Customers paid $13,000 for services rendered March 14.
March 27 Customers paid $23,000 in advance for services to be received.
March 28 Employees were paid wages for the final weeks of March, totaling $453,000.
March 28 Electricity bill was received totaling $6,750.
March 28 Phone bill was received totaling $8,754.
March 31 Miscellaneous expenses for the month were totaled at $15,450.

As in the example above, these transactions are then recorded into the accounting journal. Below is the table that
records the accounting journal for March 2013.

Third Example

For this last example, transactions will be recorded in three separate tables to represent four separate journals –
purchases journal, sales journal, cash receipts journal, and cash disbursements journal. This example should give
you a greater understanding of the debit-credit rules.

This company was incorporated January 1, 2014. They started out with a cash value of $2,350,000, and they have
25,000 stock at $200 par value. These are their transactions for the first month:

Date Transaction
January 2 Rent was paid for the month totaling $62,500.
Equipment costing $830,000 was purchased. $310,000 was paid in cash, and the remaining amount of
January 3 $520,000 was a one year note payable with an interest rate of 4.6%.
January 3 Purchases were purchased on account totaling $340,000.
January 4 Services were provided to customers, and the company received $570,000 in cash.
January 5 Sales were made, and the company received $350,000 in cash.
January 6 The accounts payable for Purchases purchased on January 3 was paid.
Sales were made totaling $475,000. Customers paid $235,000 in cash and promised to pay the
January 7 remaining $240,000 in the future.
Services were provided to customers totaling $654,000. Customers paid $300,000 in cash and
January 8 promised to pay the remaining $354,000 in the future.
January 9 Purchases were purchased on account totaling $115,000.
January 10 Customers paid $25,000 for sales made on January 7 leaving a balance of $215,000.
January 11 Employees were paid wages totaling $457,000 for the first two weeks of January 2014.
January 12 The accounts payable for Purchases purchased on January 9 was paid.
January 13 Customers paid $65,000 for services rendered on January 8 leaving a balance of $289,000.
The company paid $35,000 to the note payable for equipment purchased January 3 leaving a balance
January 14 of $485,000.
Janaury 15 Customers paid $53,000 for sales made on January 7 leaving a balance of $162,000.
January 16 Customers paid $43,000 for services rendered on January 8 leaving a balance of $246,000.
January 17 Purchaseswere purchased on account for $75,000.
January 18 Customers paid $35,000 for services rendered on January 8 leaving a balance of $211,000.
January 19 The company paid $75,000 for equipment purchased January 3 leaving a balance of $410,000.
January 20 The accounts payable for Purchasespurchased on January 17 was paid.
January 21 Customers paid $100,000 for sales made on January 7 leaving a balance of $62,000.
January 22 Sales were made, and the company received $235,000 in cash.
January 23 Customers paid $211,000 for services rendered on January 8.
January 24 Customers paid $65,000 in advance for services to be rendered.
January 25 Employees were paid wages totaling $545,000 for the third and fourth weeks of January 2014.
January 26 Customers paid $62,000 for sales made on January 7.
January 27 Sales were made, and the company received $345,000 in cash.
January 28 Purchases were purchased on account totaling $215,000.
January 29 The accounts payable for Purchases purchased on January 28 was paid.
January 30 Services were provided to customers, and the company received $765,000 in cash.
January 31 Dividends were paid totaling $1,000,000.
January 31 Electricity bill totaling $15,450 was received.
January 31 Phone bill totaling $17,850 was received.
January 31 Miscellaneous expenses for the month totaled to $650,000.