Procedural Learning Objectives
P1: Record transactions in a journal andpost entries to a ledger (T account).
P2: Prepare and explain the use of a trialbalance.
P3: Prepare financial statements frombusiness transactions.
P1: Record transactions in a journal andpost entries to a ledger (T account).
P2: Prepare and explain the use of a trialbalance.
P3: Prepare financial statements frombusiness transactions.
2-2
Analyzing and Recording Process
Exchanges of economic considerationbetween two parties.
C 1
External Transactionsoccur between the
organization and anoutside party.
Internal Transactionsoccur within the
organization.
2-3
Analyzing and Recording Process
Accounting process:-Identifies business transactions and events,-Analyzes and records their effects, and-Summarizes and presents information in reportsand financial statements.
Steps in accounts process that focus onanalyzing and recording transactions and events are:(1)Record relevant transactions and events in a journal,(2) Post journal information to ledger accounts, and(3) Prepare a trial balance.
Accounting records are informally referred as theaccounting books, or simply the books.
Accounting process:-Identifies business transactions and events,-Analyzes and records their effects, and-Summarizes and presents information in reportsand financial statements.
Steps in accounts process that focus onanalyzing and recording transactions and events are:(1)Record relevant transactions and events in a journal,(2) Post journal information to ledger accounts, and(3) Prepare a trial balance.
Accounting records are informally referred as theaccounting books, or simply the books.
Analyze each transaction andevent from source documents
Analyzing and Recording Process
Record relevant transactionsand events in a journal
C 1
Analyze each transaction andevent from source documents
Record relevant transactionsand events in a journal
Post journalinformation to
ledger (T)accountsPrepare and analyze
the trial balance2-5
BankStatements
PurchaseOrders
Checks
Source Documents
Bills fromSuppliers
EmployeeEarningsRecords
C 2
SalesTickets
BankStatements
EmployeeEarningsRecords
2-6
An account is arecord of
increases anddecreases in aspecific asset,liability, equity,
revenue, orexpense item.
An account is arecord of
increases anddecreases in aspecific asset,liability, equity,
revenue, orexpense item.
The Account and its Analysis
The generalledger is a record
containing allaccounts used by
the company.
The generalledger is a record
containing allaccounts used by
the company.
C 3
An account is arecord of
increases anddecreases in aspecific asset,liability, equity,
revenue, orexpense item.
An account is arecord of
increases anddecreases in aspecific asset,liability, equity,
revenue, orexpense item.
The generalledger is a record
containing allaccounts used by
the company.
The generalledger is a record
containing allaccounts used by
the company.
2-7
AssetsAccounts
AssetsAccountsAssets
AccountsAssets
AccountsAsset
AccountsAsset
Accounts =
The Account and its Analysis
+LiabilityAccountsLiability
AccountsLiability
AccountsLiability
AccountsLiability
AccountsLiability
AccountsEquity
AccountsEquity
AccountsEquity
AccountsEquity
AccountsEquity
AccountsEquity
Accounts
C 3
2-8
LandLandCashCash
AccountsReceivableAccounts
Receivable
AssetAccounts
AssetAccounts
Asset AccountsC 3
EquipmentEquipment
BuildingsBuildings NotesReceivable
NotesReceivable
SuppliesSupplies
PrepaidAccountsPrepaid
Accounts
AssetAccounts
AssetAccounts
2-9
NotesPayableNotes
PayableAccountsPayable
AccountsPayable
LiabilityAccountsLiability
Accounts
Liability AccountsC 3
AccruedLiabilitiesAccrued
Liabilities
UnearnedRevenueUnearnedRevenue
LiabilityAccountsLiability
Accounts
2-10
DividendsPayable
DividendsPayable
EquityAccounts
EquityAccounts
CommonStock
CommonStock
DividendsDeclaredDividendsDeclared
Equity AccountsC 3
RetainedEarningsRetainedEarnings
EquityAccounts
EquityAccounts
RevenuesRevenues
DividendsDeclared
ExpensesExpenses
2-11
LiabilitiesLiabilities EquityEquityAssetsAssets = +
The Account and its Analysis
+ +– –
C 3
CommonStock
CommonStock DividendsDividends RevenuesRevenues ExpensesExpenses
+ +– –
2-12
Ledger and Chart of Accounts
The ledger is a collection of all accounts for aninformation system.A company’s size and diversity of operations affectthe number of accounts needed.
The ledger is a collection of all accounts for aninformation system.A company’s size and diversity of operations affectthe number of accounts needed.
C 4
The ledger is a collection of all accounts for aninformation system.A company’s size and diversity of operations affectthe number of accounts needed.
The chart of accounts is a list of all accounts andincludes an identifying number for each account.The chart of accounts is a list of all accounts andincludes an identifying number for each account.
101 Cash 319 Dividends106 Accounts receivable 403 Consulting Revenues126 Supplies 406 Rental revenue128 Prepaid insurance 622 Salaries expense167 Equipment 637 Insurance expense201 Accounts payable 640 Rent expense236 Unearned revenue 652 Supplies expense307 Common stock 690 Utilities expense318 Retained Earnings 2-13
A T-account represents a ledger accountand is a tool used to understand theeffects of one or more transactions.
Debits and Credits
(Left side) (Right side)Debit Credit
T- Account
C 5
(Left side) (Right side)Debit Credit
T- Account
2-14
Double-Entry Accounting
NORMAL Balance
ASSETS = LIABILITIES + EQUITYDR = CR CR
Assets are on the left side of the equation;therefore, the left, or debit side is the normalbalance side for assets.
Liabilities and equities are on the right side;therefore, the right, or credit side is the normalbalance side for liabilities and equity.
ASSETS = LIABILITIES + EQUITYDR = CR CR
Assets are on the left side of the equation;therefore, the left, or debit side is the normalbalance side for assets.
Liabilities and equities are on the right side;therefore, the right, or credit side is the normalbalance side for liabilities and equity.
Double-Entry Accounting
Total amount that is debited to accountsmust equal the total amount credited toaccounts for each transaction.
Sum of debit account balances in theledger must equal the sum of creditaccount balances.
ASSETS = LIABILITIES + EQUITY||
ASSETS = LIABILITIES + Common Stock – DIV + REV - EXP
Total amount that is debited to accountsmust equal the total amount credited toaccounts for each transaction.
Sum of debit account balances in theledger must equal the sum of creditaccount balances.
LiabilitiesLiabilities EquityEquityAssetsAssets = +
Double-Entry AccountingNORMAL Balance
ASSETS LIABILITIES EQUITIES
C 5
Debit Credit Debit Credit Debit Credit+ -+ - - +- + - +- +
2-17
Whether a debit or a credit is an increase or decreasedepends on the NORMAL Balance of the account.
RevenuesRevenues ExpensesExpensesCommon
StockCommon
StockDividendsDividends__ ++ __
EquityEquity
C 5 Double-Entry AccountingNORMAL Balance
Revenues ExpensesCommon
StockDividends ++
Debit Credit
Stock
- +- +Debit Credit
Dividends
+ -+ - Debit Credit
Expenses
+ -+ -Debit Credit
Revenues
- +- +
2-18
An account balance is the difference between theincreases and decreases in an account.
Notice the T-Account
C 5
Double-Entry AccountingNORMAL Balance
Investment by owner for stock 30,000 Purchase of supplies 2,500Consulting services revenues earned 4,200 Purchase of equipment 26,000Collection of accounts receivable 1,900 Payment of rent 1,000
Payment of salary 700Payment of accounts payable 900Payment of cash dividend 200
Total increases 36,100 Total decreases 31,300Balance 4,800
Cash
2-19
Journalizing & Posting Transactions
Step 1: Analyze transactionsand source documents.
LiabilitiesLiabilities EquityEquityAssetsAssets = +
Step 2: Apply double-entry accounting
(Left side) (Right side)Debit Credit
T- Account
P1
Step 1: Analyze transactionsand source documents.
Step 2: Apply double-entry accounting
ACCOUNT NAME: ACCOUNT No.
Date Description PR Debit Credit Balance
Step 4: Post entry to ledger
GENERAL JOURNAL Page 123
Date DescriptionPost.Ref. Debit Credit
Step 3: Record journal entry2-20
GENERAL JOURNAL Page 1Date Account Titles and Explanations PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased supplies for cash
Journalizing Transactions
TransactionDate
TransactionDate
Titles of AffectedAccounts
Titles of AffectedAccounts
P1
GENERAL JOURNAL Page 1Date Account Titles and Explanations PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased supplies for cash
Dollar amount of debitsand credits
Dollar amount of debitsand credits
TransactionexplanationTransactionexplanation
2-21
T-accounts are useful illustrations, butbalance column accounts are used inpractice.
Balance Column AccountP1
CASH ACCOUNT No. 101
Date Explanation PR Debit Credit Balance2009
Dec. 1 Initial investment 30,000 30,000Dec. 2 Purchased supplies 2,500 27,500Dec. 3 Purchased equipment 26,000 1,500Dec. 10 Collection from customer 4,200 5,700
2-22
GENERAL JOURNAL Page 1Date Account Titles and Explanation PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cash
Posting Journal EntriesP1
GENERAL JOURNAL Page 1Date Account Titles and Explanation PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cash
CASH ACCOUNT No. 101
Date Explanation PR Debit Credit Balance2009
Dec. 3 Purchased equipment G1 20,000.00 ########Dec. 10 Collection from customer G1 2,200.00 ########
11 Identify the debit account in ledger.
2-23
GENERAL JOURNAL Page 1Date Account Titles and Explanation PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cash
Posting Journal EntriesP1
GENERAL JOURNAL Page 1Date Account Titles and Explanation PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cashCASH ACCOUNT No. 101
Date Explanation PR Debit Credit Balance2009
Dec. 1
Dec. 3 Purchased equipment G1 20,000.00 ########Dec. 10 Collection from customer G1 2,200.00 ########
22 Enter the date.
2-24
GENERAL JOURNAL Page 1Date Account Titles & Elxplanations PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cash
Posting Journal EntriesP1
GENERAL JOURNAL Page 1Date Account Titles & Elxplanations PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cashCASH ACCOUNT No. 101
Date Explanation PR Debit Credit Balance2009
Dec. 1 30,000
Dec. 3 Purchased equipment G1 20,000 (20,000)Dec. 10 Collection from customer G1 2,200 (17,800)
33 Enter the amount and description.
2-25
GENERAL JOURNAL Page 1Date Account Titles and Explanation PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cash
Posting Journal EntriesP1
GENERAL JOURNAL Page 1Date Account Titles and Explanation PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cashCASH ACCOUNT No. 101
Date Explanation PR Debit Credit Balance2009
Dec. 1 G1 30,000
Dec. 3 Purchased equipment G1 20,000 (20,000)Dec. 10 Collection from customer G1 2,200 (17,800)
44 Enter the journal reference.
2-26
GENERAL JOURNAL Page 1Date Account Titles & Elxplanations PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cash
Posting Journal EntriesP1
CASH ACCOUNT No. 101
Date Explanation PR Debit Credit Balance2009
Dec. 1 G1 30,000 30,000
Dec. 3 Purchased equipment G1 20,000 (20,000)Dec. 10 Collection from customer G1 2,200 (17,800)
55 Compute the balance.
GENERAL JOURNAL Page 1Date Account Titles & Elxplanations PR Debit Credit2009Dec. 1 Cash 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cash
2-27
GENERAL JOURNAL Page 1Date Account Titles and Explanation PR Debit Credit2009Dec. 1 Cash 101 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cash
Posting Journal EntriesP1
GENERAL JOURNAL Page 1Date Account Titles and Explanation PR Debit Credit2009Dec. 1 Cash 101 30,000
Common stock 30,000 Investment by shareholders
Dec. 2 Supplies 2,500Cash 2,500
Purchased store suppliesfor cashCASH ACCOUNT No. 101
Date Explanation PR Debit Credit Balance2009
Dec. 1 G1 30,000 30,000
Dec. 3 Purchased equipment G1 20,000 (20,000)Dec. 10 Collection from customer G1 2,200 (17,800)
Enter the ledger reference.66
2-28
Transaction:1Shareholders invested $30,000 in FastForward onDec. 1.
Analyzing Transactions
Assets = + EquityCash Common
Stock30,000 30,000
LiabilitiesAnalysis:
A1
Assets = + EquityCash Common
Stock30,000 30,000
Liabilities
(1) Cash 101 30,000Common stock 301 30,000
Double entry:
(1) 30,000Cash 101
(1) 30,000Common Stock 301
Posting:
2-29
Analyzing Transactions
Transaction:2FastForward purchases supplies by paying $2,500cash.
Assets = + EquityCash Supplies Common
Stock(2,500) 2,500
LiabilitiesAnalysis:
A1
Assets = + EquityCash Supplies Common
Stock(2,500) 2,500
Liabilities
(2) Supplies 126 2,500Cash 101 2,500
Double entry:
(2) 2,500Supplies 126
(1) 30,000 (2) 2,500Cash 101
Posting:
2-30
Transaction:3FastForward purchases equipment by paying $26,000cash.
Analyzing Transactions
Assets = + EquityCash Equipment Common
Stock(26,000) 26,000
Liabilities
A1
Analysis:Assets = + Equity
Cash Equipment CommonStock
(26,000) 26,000
Liabilities
(3) Equipment 167 26,000Cash 101 26,000
Double entry:
(1) 30,000 (2) 2,500(3) 26,000
Cash(3) 26,000
Equipment 167 101
Posting:
2-31
Transaction:4 FastForward purchases $7,100 of supplies on credit.
Analyzing Transactions
Assets = + EquitySupplies Accounts Payable Common
Stock7,100 7,100
Liabilities
Analysis:
A1
Assets = + EquitySupplies Accounts Payable Common
Stock7,100 7,100
Liabilities
(4) Supplies 126 7,100Accounts payable 201 7,100
Double entry:
2,500(4) 7,100
Supplies 126(4) 7,100
Accounts Payable 201
Posting:
2-32
Analyzing Transactions
Transaction:5FastForward provides consulting services andimmediately collects $4,200 cash.
Assets = + EquityCash Revenue
4,200 4,200
Liabilities
Analysis:
A1
Assets = + EquityCash Revenue
4,200 4,200
Liabilities
(5) Cash 101 4,200Consulting Revenue 403 4,200
Double entry:
(1) 30,000 (2) 2,500(5) 4,200 (3) 26,000
Cash(5) 4,200
Consulting Revenue 403 101
Posting:
Analyzing Transactions
Transaction: 6 FastForward pays $1,000 cash for December rent.
Assets = + EquityCash (Expense)
(1,000) (1,000)
Liabilities
Analysis:
A1
Assets = + EquityCash (Expense)
(1,000) (1,000)
Liabilities
(6) Rent Expense 640 1,000Cash 101 1,000
Double entry:
(1) 30,000 (2) 2,500 (5) 4,200 (3) 26,000
(6) 1,000
Cash(6) 1,000
Rent Expense 640 101
Posting:
Analyzing Transactions
Transactions 7: Payment of Salaries expenses in cashAnalysis: - Assets (Cash) = – Equity (Expenses)Double entry: Debit Salaries Expenses and credit Cash
Transaction 8: Provide services and rents test facilities for creditAnalysis: + Assets (Accts Receivable) = + Equity (Revenues)Double entry: Debit Accounts Receivable and Credit ConsultingRevenue and Credit Rental Revenue
Transaction 9: Receipt of cash from accounts receivableAnalysis: + Assets (Cash) = – Assets (Accounts Receivable)Double entry: Debit Cash and credit Accounts Receivable
Transactions 7: Payment of Salaries expenses in cashAnalysis: - Assets (Cash) = – Equity (Expenses)Double entry: Debit Salaries Expenses and credit Cash
Transaction 8: Provide services and rents test facilities for creditAnalysis: + Assets (Accts Receivable) = + Equity (Revenues)Double entry: Debit Accounts Receivable and Credit ConsultingRevenue and Credit Rental Revenue
Transaction 9: Receipt of cash from accounts receivableAnalysis: + Assets (Cash) = – Assets (Accounts Receivable)Double entry: Debit Cash and credit Accounts Receivable
Analyzing Transactions
Transaction 10: Payment of accounts payableAnalysis: – Assets (Cash) = – Liability (Accounts Payable)Double entry: Debit Accounts Payable and credit Cash
Transaction 11: Payment of cash dividendAnalysis: – Assets (Cash) = – Equity (Dividends)Double entry: Debit Dividends and credit Cash
Transaction 12: Receipts of cash from a customer for futureconsulting servicesAnalysis: + Assets (Cash) = + Liabilities (Unearned Revenue)Double entry: Debit Cash and credit Unearned Consulting Revenue
Transaction 10: Payment of accounts payableAnalysis: – Assets (Cash) = – Liability (Accounts Payable)Double entry: Debit Accounts Payable and credit Cash
Transaction 11: Payment of cash dividendAnalysis: – Assets (Cash) = – Equity (Dividends)Double entry: Debit Dividends and credit Cash
Transaction 12: Receipts of cash from a customer for futureconsulting servicesAnalysis: + Assets (Cash) = + Liabilities (Unearned Revenue)Double entry: Debit Cash and credit Unearned Consulting Revenue
Analyzing Transactions
Transaction 13: Pay cash for future insurance coverageAnalysis: – Assets (Cash) = + Assets (Prepaid Insurance)Double entry: Debit Prepaid Insurance and credit Cash
Transaction 14: Purchase supplies for cashAnalysis: - Assets (Cash) = + Assets (Supplies)Double entry: Debit Supplies and credit Cash
Transactions 15: Payment of utilities expenses in cashAnalysis: – Assets (Cash) = – Equity (Expenses)Double entry: Debit Utilities Expense and credit Cash
Transactions 16: Payment of salaries expenses in cashAnalysis: – Assets (Cash) = – Equity (Expenses)Double entry: Debit Salaries Expense and credit Cash
Transaction 13: Pay cash for future insurance coverageAnalysis: – Assets (Cash) = + Assets (Prepaid Insurance)Double entry: Debit Prepaid Insurance and credit Cash
Transaction 14: Purchase supplies for cashAnalysis: - Assets (Cash) = + Assets (Supplies)Double entry: Debit Supplies and credit Cash
Transactions 15: Payment of utilities expenses in cashAnalysis: – Assets (Cash) = – Equity (Expenses)Double entry: Debit Utilities Expense and credit Cash
Transactions 16: Payment of salaries expenses in cashAnalysis: – Assets (Cash) = – Equity (Expenses)Double entry: Debit Salaries Expense and credit Cash
After processing its remaining transactions for December,FastForward’s Trial Balance is prepared.
After processing its remaining transactions for December,FastForward’s Trial Balance is prepared.
Debits CreditsCash 4,350$Accounts receivable -Supplies 9,720
FastForwardTrial Balance
December 31, 2009 The trial balance listsall account balancesin the general ledger.
If the books are inbalance, the total
debits will equal thetotal credits.
The trial balance listsall account balancesin the general ledger.
If the books are inbalance, the total
debits will equal thetotal credits.
A1
Supplies 9,720Prepaid Insurance 2,400Equipment 26,000Accounts payable 6,200$Unearned consulting revenue 3,000Common stock 30,000Dividends 200Consulting revenue 5,800Rental revenue 300Salaries expense 1,400Rent expense 1,000Utilities expense 230Total 45,300$ 45,300$
The trial balance listsall account balancesin the general ledger.
If the books are inbalance, the total
debits will equal thetotal credits.
The trial balance listsall account balancesin the general ledger.
If the books are inbalance, the total
debits will equal thetotal credits.
Six Steps for Searching for andCorrecting Errors
If the trial balance does not balance, theerror(s) must be found and corrected.
Make sure the trial balancecolumns are correctly added.Make sure the trial balancecolumns are correctly added.
Recompute each accountbalance in the ledger.Recompute each accountbalance in the ledger.
P2
Make sure accountbalances are correctlyentered from the ledger.
Make sure accountbalances are correctlyentered from the ledger.
See if debit or creditaccounts are mistakenlyplaced on the trial balance.
See if debit or creditaccounts are mistakenlyplaced on the trial balance.
Verify that each journalentry is posted correctly.Verify that each journalentry is posted correctly.
Verify that each originaljournal entry has equaldebits and credits.
Verify that each originaljournal entry has equaldebits and credits.
Using a Trial Balance to Prepare FinancialStatements
Statement of CashFlows
Income StatementStatement of Retained Earnings
BeginningBalanceSheet
EndingBalanceSheet
Period of TimePoint in
TimePoint in
Time
P3
Statement of CashFlowsBeginning
BalanceSheet
EndingBalanceSheet
Income Statement
Revenues: Consulting revenue 5,800$ Rental revenue 300 Total revenues 6,100$Expenses: Salaries expense 1,400 Rent Expense 1,000 Utilities Expense 230 Total expenses 2,630Net income 3,470$
FASTFORWARDIncome Statement
For the Month Ended December 31, 2009
P3
Revenues: Consulting revenue 5,800$ Rental revenue 300 Total revenues 6,100$Expenses: Salaries expense 1,400 Rent Expense 1,000 Utilities Expense 230 Total expenses 2,630Net income 3,470$
FASTFORWARDIncome Statement
For the Month Ended December 31, 2009
Statement of Retained Earnings
Balance, 12/1/09 -$ Net income for December 3,470
3,470 Less: Dividends (200)Balance, 12/31/09 3,270$
FASTFORWARDStatement of Retained Earnings
For the Month Ended December 31, 2009
P3
Balance, 12/1/09 -$ Net income for December 3,470
3,470 Less: Dividends (200)Balance, 12/31/09 3,270$
FASTFORWARDStatement of Retained Earnings
For the Month Ended December 31, 2009
Revenues: Consulting revenue 5,800$ Rental revenue 300 Total revenues 6,100$Expenses: Rent expense 1,000 Salaries expense 1,400 Utilities expense 230 Total expenses 2,630Net income 3,470$
FASTFORWARDIncome Statement
For the Month Ended December 31, 2009
Balance Sheet
AssetsCash 4,350$Supplies 9,720Prepaid insurance 2,400Equipment 26,000Total assets 42,470$
LiabilitiesAccounts payable 6,200$Unearned revenue 3,000Total liabilities 9,200
EquityCommon stock 30,000Retained earnings 3,270Total equity 33,270Total liabilities and equity 42,470$
FASTFORWARDBalance Sheet
December 31, 2009
Balance, 12/1/09 -$ Net income for December 3,470
3,470 Less: Dividends 200Balance, 12/31/09 3,270$
FASTFORWARDStatement of Retained Earnings
For the Month Ended December 31, 2009
P3
AssetsCash 4,350$Supplies 9,720Prepaid insurance 2,400Equipment 26,000Total assets 42,470$
LiabilitiesAccounts payable 6,200$Unearned revenue 3,000Total liabilities 9,200
EquityCommon stock 30,000Retained earnings 3,270Total equity 33,270Total liabilities and equity 42,470$
FASTFORWARDBalance Sheet
December 31, 2009
Balance, 12/1/09 -$ Net income for December 3,470
3,470 Less: Dividends 200Balance, 12/31/09 3,270$
FASTFORWARDStatement of Retained Earnings
For the Month Ended December 31, 2009