 So the question is, is cash affected here? So if we go up, we're going to say, yeah, cash is affected. We pay the employee with cash, a check, but that's going to be cash in this case. So cash has a debit balance. We're going to make it go down by doing the opposite thing to it, which in this case would be a credit. So I'm going to go ahead and copy cash, going to go down to H and 9, right click and paste it 1, 2, 3. Also note that we're not talking about payroll taxes or anything right now. We're just, this would be the simplified journal entry for payroll if we didn't have payroll taxes, which we will talk about at a later time. And cash is going to go down by the amount paid being 800. So I'm going to say negative 800 to represent a credit in this worksheet. If we credit something, we're also going to have to debit something, put the debit on top and sell I8 for 800. Now the only question is, what will that debit be? And if we look at the trial balance, we're looking for something related to payroll. So we see a salaries payable here. We see a salaries expense down here. Now, which one are we going to put it into? In this case, it's going to be the expense. When we record the expense for the books, for the payroll department, it's generally going to be recorded to an expense. Now you'll note that there's something in salaries payable right now. And you might be asking, why is there something there? And the reason for that could be that we had an accrual entry, which we'll talk about later, from the prior period. And I'm going to adjust that. We're going to take a look at that and make those adjustments at the end of the period and discuss that as we go at that time. In terms of the payroll department, oftentimes they will just record the salary expense in the salary expense area and be more actually on a cash basis in that way. So expenses have debit balances such as this miscellaneous expense represented by the fact that it does not have brackets. Expenses generally only go up. And we're going to make it go up by doing the same thing to it, which in this case would be another debit. So I'm going to right click and paste it 123. All right, there's our transaction debit the salaries expense credit cash. We're going to go ahead and post that out. So I'm going to look for salaries expense first. That's going to be an expense area. It's going to be a blue account over here. So the assets are here first and their green and the liabilities are orange and then the equity and then the revenue. And then there's expense accounts and here's salaries expense way over here in AI, AI nine. So it's an AI nine way over here. And notice again, it goes to Z and it keeps on going out. It can be a little confusing to go through these screens. There's a lot of different ways that you can manipulate Excel to work with screens that are larger than the screen we're looking at. You can manipulate the size. You can also freeze the pains and what not, whatever works for you. But in this cell, I'm going to say equals and I'm going to hold down the left arrow until I hit the wall. I'm going to go all the way till I hit the wall. And then I'm looking for that 800 related to salaries, which is in cell I eight and enter. And notice you could go over here. If you're following the video, you could just type in equals I eight. But I find that it's a lot nicer to go point to it because then you physically are pointing to it and seeing what is going in that cell. All right, so I'm going to scroll back over here. Now, of course, we were out of bounds by the 800, the other side being cash. We're out of bounds by the 800 here and here. And cash is going to be over here in P 16. So P 16 in the cash, we're posting the general journal to the general ledger equals going to point to that 800. Now, and the 51 six is going to go down by 802, the 58. And we can see we're back in balance here, which is good green zero is good because that means the debit minus credits equal zero. So the debit's equal to credits and what happened to net income? Well, it went down by the 800. So we have the 26 eight now minus the eight minus the four note. Also, if you're using Excel and you highlight a certain set of numbers, it will generally calculate that for you in the formula bar. So there's the 25 six. Here's the 25 six. So that's a handy little thing to have as well. We can go down to the next transaction, which is going to be on 5 30. 5 30 we pay cash for miscellaneous expense. So once again, miscellaneous expense probably not a great expense to have, but we're going to keep the expenses a little bit smaller here so that to keep this problem a little bit more simplified. The expenses will probably have more expenses than any other type of account for most companies. But note that they all act the same way. It's just a matter of how do we want to group the expenses. If we have a lot of little things that we pay for that are not significant, we may put them in accounts such as miscellaneous expense. Other types of accounts similar to misplacing expense are like office expense, office supplies. Those are types of things that sometimes people put a lot of stuff into which may not be exactly office supplies. But you want to put your expenses in a category system that is one helping you to make decisions, but two isn't so cumbersome that I have so many expense accounts that it's not helping you make decisions just cluttering things up. So obviously I don't like the expensive miscellaneous type of category too much, but if there are some small things that are not material to decision making that may be appropriate to put them in the miscellaneous and obviously if someone just went into a small company and drew cash out of the checking account and spent it and didn't keep the receipts and whatnot, then we are going to have to record it somewhere and miscellaneous expense or office supplies and whatnot is usually where that type of thing will go. And so then here is cash affected for this transaction. We're going to say that yes cash is a debit balance. We're going to make it go down how we're going to make it go down by doing the opposite thing to it, which in this case would be a credit. So I'm going to copy that going to put our cursor under. So here's the date. I'm going to put our cursor under that in h12 in this case right click and paste it 123 the amount that we're going to put there. All right. So the amount will be a negative 250 in this case for the credit balance. If we're going to credit something, we're also going to debit something for that 250. And what will that debit be? And in this case, we already said that the debit will be miscellaneous expense. So if we take a look at this, remember that the assets are going to be up here on top, then the liabilities, then the equity, then the income, then the expenses down here. We're down here and miscellaneous expense. We can see that the expenses all have debit balances. They only go up in the debit direction. Therefore, we're going to do the same thing to it, which in this case would be another debit. So I'm going to right click, going to copy this account here, going to put it on top in h11, right click and paste 123. So now we're going to go and post this transaction to the general ledger. So we're looking for the miscellaneous account. We're going to post it to the general ledger, which is over here. And we can see that this is in order. Assets are where we start off with cash and asset, receivable and asset, payables and assets are prepaid insurance, then accounts, payables, the liability, then equity and then revenue and then expenses. And of course, miscellaneous is way on the bottom, because we're kind of like a shame difference. We put it way on the bottom over here. So we got it over in AM 22. We have this miscellaneous account. So it goes from Z and then we remember it goes all the way over to AM 22 down here in miscellaneous, we're going to say equals. I'm going to post it this way. I'm going to hit the left arrow, hold it down to like it all the way down here and then you scroll up to that 250, which is in I 11 and enter. Again, you could just delete it and put in equals I 11. You could put the number in there, but I highly recommend putting the formula in there because it can really help you if you are out of balance. So for example, in this case, we are of course out of balance by the 250 at this time. And that's because we haven't recorded the cash side. If we didn't know that and we're trying to figure it out, we could try to do something like what if we just deleted the numbers, would it be back in balance over here? If we used formulas, then it may well be. So if I say delete, then I could say, ah, well, it's something that has to do with that transaction. And then if I say undo, then our numbers are back, we're back out of balance. And then we could try to see, well, which one of these aren't posted. And if I put my cursor there and we use our tracer items here, not that one, but this one, then we can say, ah, that one's posted over there and I can hit this one and say, oh, that one's not posted. That's the problem. We didn't post that. If we hard code the numbers, we won't be able to do that. And where are those located? Again, those are in the formulas area in the formula auditing and they're up here in these trace items. So it can be really helpful to figure things out if we use the formulas in this, ah, system when we post them. So we're going to post the second half now to the cash. So cash is over here. We're in the credit side. We're in cell P17. We're going to say equals and then scroll over to that credit of 250 in G12. Once we hit enter, the 50,008 will go down to 50,005. 50 puts us back in balance over here. What happened in that income? It went down. So we're calculating revenue minus the 800 minus the 65 is the 25,350 also showing down here, 25,350 in the taskbar because we are highlighting those areas. That is income. That's not a loss. Credits are actually good on the income statement. All right. Next transaction. We're down to the end of the month here. It's going to be 531. And once again, we paid cash for miscellaneous expense. So we're paying our bills here and we're not grouping them very well. I don't think we put them in miscellaneous expense, but we're assuming that they're in material and therefore we're grouping them into one area here. And therefore it's going to be a similar transaction. We paid cash. Cash is the debit balance. We're going to make it go down by doing the same thing to it, by doing the opposite thing to it, which in this case would be a credit. I'm going to copy the cash. Going to put it under the date. So here's the date going to put it under the date in H15. Right click. Paste it 123. Then we're going to go into the credit column. The credit amount being in this case a negative to represent the credit 300 and enter that puts the brackets around it. If we credit something, we also need the debit and the debit generally goes on top. So that will be 300 in cell I 14. The only question is what will that debit be? Once again, we bought something for the miscellaneous expense. So we got assets and then we got liabilities, equity, income, miscellaneous expenses. All expenses have debit balances. They generally only go up. And how do we make something go up? We do the same thing to it, which in this case would be another debit. So we're going to debit the miscellaneous expense, which we already knew because we credited cash. Right clicking, pasting 123 values only. Now we can post this out in a similar way. Once again, this is a general journal. We're going to post that to the general ledger. We're going to post miscellaneous expense. The general ledger is in order by account. We have assets and green liabilities in orange, equity in the brighter red, yellow or blue and then revenue and expenses in the less bright blue. And we're down here way in the bottom in cell AM 23 in miscellaneous expense equals. I'm going to hold down the left arrow till I hit the wall and then scroll up to the miscellaneous expense 300 in I 14 and enter. We should see that 300 point post up here. We should see the 650 go up in the debit direction to 950. We'll also see that 950 over here on trial balance because it pulls over. We are now out of bounds by the 300 until we post the cash side of the entry. So we're going to go to cash general ledger over here in P 18, say equals and then scroll over to the cash, which is the credit and we see the debit balance here. It's going to go down because we're doing the opposite thing to it to 50,000 to 50. That puts us back in balance and we know that net income went down by that 302. In this case, 2550 calculated as the revenue less the expenses revenue is winning, which is good by 2550. All right. Next transaction on 331 again. We have cash from clients for work done in this month. So we had we did work this month and we got the cash this month. All right. So is cash affected? Yeah, we did work and we got cash. So cash has a debit balance. We're going to make it go up by doing the same thing to it, which in this case would be another debit. So I'm going to right click on that going to copy that going to put that on top on cell H 17, right click and paste it 123. So the amount that we got in this case is 3000. So we're going to credit 3000 as well and negative 3000 and enter. What will that account be? Well, we earned revenue. That's why people are going to pay us cash because we earned it and we earned it in this time period. So we did the work this time period. We can see that we have assets, liabilities, equity and then revenue. And so revenue has a credit balance. It only goes up. We're going to do the same thing to it in this case, which would be another credit going to right click and copy and put that underneath in cell H 18, right click and paste it 123. Then we're going to go ahead and post this out. So we'll go over here to cell 0819. I mean 019 equals and scroll over and point to that 3000. The 50,000, 250 will go up by 3002, 53, 250. Now we're out of balance of course until we record the second half. Remember recording the journal entry to the general ledger and where's the revenue account over here? It's an order assets and then liabilities and then equity and then revenue. So here's revenue. Notice it only has credits because revenue only goes up in the credit direction and we're in AF23, AF23. I'm going to say equals in that cell and then hold down that left arrow till I hit the wall. We're looking for that 3000. There it is. And that's the revenue account. We're going to hit enter and that makes revenue go up from 268 to 298. And if we scroll back over to the trial balance, we'll see that 298 over here as well. What happened to net income? It went up by the 3000 now having 298 minus 8 minus 250, giving us 2850. All right. Next transaction. We are still on 531. And we had services provided on account. Cash has not yet been collected. So now this is the work that we did that we didn't get cash in this month for. So therefore we did work and haven't got cash yet, but we are going to assume that we got something. What do we get? We got an IOU. What's the IOU account? Accounts receivable. So if we did the work, we're going to assume we got something on the accrual basis. We don't do work and not get anything. We haven't got anything physically yet, but we're going to assume that we got an IOU here for the work that we did. The accounts receivable has a debit balance. We're going to make it go up by doing the same thing to it, which in this case would be another debit. We're going to right click on that. We're going to copy that. We're going to bring our cursor down to H20. Right click and paste it 123. Then the amount will be 2000. We're going to credit something for the same 2000s. We're going to put a negative 2000 in this case. And then the question is, why are people going to pay us money? Because we earned revenue. So it's assets on top, then liabilities, then equity, and then revenue. Revenue has a credit balance. We're going to make it go up by doing the same thing to it, which in this case would be another credit. So I'm going to right click on that. Got to copy that. Going to put that in cell H21. Right click and paste it 123. Then we can go ahead and post this out. So this is the general journal that we're going to post to the general ledger. We're looking for the accounts receivable and accounts receivable will be in cell S13. We're going to say equals in cell S13. We're going to go ahead and point to that 2000 next to the receivable, which should make the receivable go up from 38258. Push this out of bounds by that 2000 until we record the other side. So the other side being revenue. So the general ledger is in order. We got assets over here in green, then liabilities in orange, and then equity, and then revenue. So here's revenue down here. Notice they all have credits because they only go one way. They go up in the credit direction. And we are in AF20 in this case. So we're going to say equals in AF20 and hold down that left arrow until we get to the revenue account. There's the 2000 and say enter and revenue will go up from 298 to 318. Where will we see that 318? Also on the trial balances where we will see it right there. What happened to net income? It went up by 2002. 318 minus 8 minus 950 equals net income of 30,050. Also showing in the tax bar 30,050 because we are highlighting those cells. Okay, one more transaction on 531 and the owner withdraws money. So if we are the owner, then we're going to say, okay, I'm going to take some money out of the business. The business account is a course for business. If I want to go on vacation or whatnot on the personal side, then I should first take the money out of the business account, put it into my personal account, then go on vacation. So that's going to be the plan now. We're going to pull out the money from the business. So is cash affected? Yeah, for the business, the money is being pulled out. So cash has a debit balance. We're going to make it go down by doing the opposite thing to it, which in this case would be a credit. So I'm going to copy the cash. I'm going to put it on the bottom. So here's the date. I'm going to go to the bottom, right click, paste it 123. I'm going to go to the column J, credit side negative 10,000. We're going to debit something. The debit will go on top for the same amount, 10,000. And the only question is, what will that debit be then? And the owner's drawing the money out. So it's going to be down here in the equity section. And the reason I make the equity section highlighted in blue in this case is because that's kind of like the dividing line between the balance sheet, which is up here and the income statement, which is down here. So here's the equity section. Here's the amount owed to the owner as of the beginning of the time period. And we're going to make that go down, but we're not going to put it to that account directly. We're going to make kind of like a contra equity account just called draws so that we can see directly how much money was taken out by the owner. And that's important when we're so prior to becomes more important when we're a partnership, because we want to see exactly how much each partner took out during the certain time period. So we're going to say draws is going to be the debit. We already know it's going to be a debit because we credit a cash. If we think about it, why is it a debit? Because really it's bringing this equity account down. It's kind of like a contra equity account that has a credit balance. We need to make it go down by doing the opposite thing to it. So we're making a new account, which will actually go up in the debit direction, but it's really bringing the total equity down. So we're going to go ahead and copy that and paste it here in age 23, right click, paste it 123 and then post that out. So that's an equity account. So we're posting this general journal entry to the general ledger, looking for draws, which is an equity account. General ledgers in order assets and then liabilities, then equity. So here's draws over here in AE 14. So AE 14, we're going to say equals. I'm going to hold down the left arrow. We're going to go to this draws of 10,000 and enter. And there's the 10,000. We can see the 10,000 here. We are now out of balance by the 10,000 until we record the other side to cash, which will be over here in cell P 20. So we're in P 20. And we'll just say equals and left down to cash. And when we hit enter, the 10, the 53, 250 will go down to 53, 43, 250. And that will also be on the trial balance over here. And we are back in balance. So just noticed that the trial balance is back in balance. If we look at the accounting equation, we can see that assets equal liabilities plus owner's equity. If we rearrange that, also note that it also means that assets minus liabilities will equal equity, meaning the equity is the book value. And you can see that here too. Notice that if I highlight the assets, adding this, adding this, adding this, I'm up to 77, 1. If you keep watching that number, it's going to now go down by the 330 to the 76, 770, then down to 68, 970, and so on till it gets to 62, 350. That 62, 350 has to be the same as these blue numbers here. So the reason all these numbers are blue, even though we have the revenue, the expenses, is because really, they're all part of equity. Notice they're all part of this number. And that has to make sense because the top half represents what we have minus who we owe it to. The bottom half represents what is owed to the owner or what the book value of the company is worth. But it's currently broken out between basically the beginning balance and or investments and what was taken out and all of the what was earned through that time period. So if we highlight this second half, we also come out to this 62, 350, which we have up here 62, 350. So keep that in mind. You can look at this trial balance and spend some time looking at the trial balance and highlighting different things and seeing how this ties out to the accounting equation.