 Unlike that, we didn't pay cash, we have an IOU in the future. If you see the terminology of on account, it's probably going to mean accounts receivable or accounts payable. And obviously in real life, we would know these things, but when we work a problem, we got to kind of know the terminology and put ourself in the shoes of the problem and know what those accounts mean. So the cash is not affected. We pay for something other than cash. Now, the account that we're going to use as the IOU that we owe somebody else is called accounts payable. But in this case, I often think it might be easier to think about what we got rather than the IOU because we've been working with assets more than liabilities. And if we're trying to see if we should debit or credit a particular account, it might be easier to think about the asset side of it. So in this case, we bought supplies. So supplies is up here. We can see supplies right there. And we can see that it's an asset, just like all these other assets, cash and receivable. And we got more of it. Therefore, it's going to go up. How do we make something go up? We do the same thing to it. That's a debit. Therefore, we're going to debit it in order to make it go up. So even though we know that the other half is the payable, we might want to think of the asset because we've worked with cash the most and we know which way cash we're going to go. So I'm going to right-click on a copy. I'm going to put my cursor in C23, right-click and paste it 1, 2, 3. And that's going to go up then. And so D23, the amount being this 7, 5. So we're going to credit something by the same amount, 7, 5. So we're going to put a negative of 7, 5. We need to have an equal number of debits and credits in each transaction. And now we already know that we're going to credit the accounts payable. And we can now think that through. Does it make sense that we're going to credit the accounts payable Well, accounts payable is a liability. Liabilities have credit balances represented by the brackets. In order to make it go up, we would do the same thing to it, which would be another credit. Which makes sense because we owe more money now after this purchase. So it does make sense that we would credit the liability. Going to right-click here, going to copy that. Going to go down here to sell C24, right-click and paste it 1, 2, 3. All right, so now let's post this out. This is called the general entry that we are going to post to the general ledger. So I'm going to make this a little bit smaller like so. And then we're going to look this over and we're going to look for the supplies. By the way, you might be thinking, why is supplies an asset and not an expense? Many people might be expensing their supplies and there's nothing wrong with that. But in this case, if the supplies were large and material to our decision making, then we should put the supplies on as an asset and then count them at the end of the time period and then expense them as we go. If on the other hand supplies is in material, say we bought like a five-year supply of paper clips for like $25, you know, we're not, even though the paper clips are going to last a long period of time, we are not going to go through the trouble of counting the paper clips and expensing them as we use the paper clips. We're just going to go ahead and expense them. So the other reason we put supplies up here is because although we're not talking about inventory yet, we can account for supplies in a similar fashion that we will account for inventory. So we'll have an adjusting entry for supplies that will mirror the adjusting entry for inventory, meaning we're going to buy stuff, we're going to compile it. I think of it as like paper being an attack in the tax office. We buy a lot of paper and ink, we put that in the corner, then we use it and we're going to go ahead and count it, expense it as we use it. All right. So here's the supplies accounts over here and it's in S20. So we're going to go ahead and say equals and I'm going to point to that 75 in cell D23 and enter. And that makes the supplies go up to 885, we can see that 885 there as well. We're out of balance by the 75 and now we're going to go to the accounts payable. So accounts payable, we can just barely see it over here. Not quite the whole thing. So we're over here in AB10 and once again it goes from V up to AB and we've got a negative 300 in there so far, a credit of 300, we're going to say equals. I'm going to hold down the left arrow until I hit the wall, go down to the payable of 75 and enter. So what happened? The 300 goes up by 75 to 78. We can also see that 78 over here on the trial balance of course. So there's the 78, we can see that we are back in balance down here. We can see that there's no effect on the income statement from that transaction because we have no income or expense accounts that were affected from that transaction. All right, let's go down to the next one. Let's make our screen a little bit larger, back to 100% up in the task bar over here. Scroll back to the left and we are now on 521. 521 says, record services provided but for which cash has not yet been received. All right, so we did services but we have not yet received cash. So is cash affected? And no, we did service but we didn't get cash. So what did we get instead? If we did work, we're going to assume we got something. We're assuming we got an IOU called accounts receivable. So if we did work, we're still going to say, yeah, we received something, we received a promise to be paid and therefore this is an asset. It's not our favorite asset, it's our second favorite asset because it's going to be converted into cash hopefully within like 30 days. So it's a debit. We're going to make it go up by doing the same thing to it because people owe us more money. Therefore we're going to go ahead and debit accounts receivable. So I'm going to scroll down here, I'm going to put that on the top, I'm in cell C26. Right click, paste it 1, 2, 3 and again you could type it in there but I think that the copying and pasting is faster in my opinion and then we're going to go over here and that's going to be $808,000 and we're going to credit something. Every transaction has to have an equal number of debit credits so then over here in E27 I'm going to put a negative $8,000 when we hit enter we'll see those brackets up here. Then the only question is what will that credit account be? Why are people going to pay us $8,000 because we did work and in doing work we earned revenue. So revenue is down here, remember it's always going to be in order meaning assets, liabilities, equity and then revenue and expenses. Most people get the assets and revenue a little bit mixed up in terms of they're both kind of like good things, they're both things that we like. Notice we like both sides of this transaction, we like the receivable, we like the people owe us more money, we also like the revenue which is the income half of it meaning that means we earned the revenue. So we earned the revenue, we're getting paid in an IOU at this time, that IOU will hopefully be converted to cash at a later time. So notice that the revenue account has a credit balance and we need to make it go up so we're going to do the same thing which is another credit. Note that revenue always gets credited so I'm going to copy that, kind of paste it 1, 2, 3. Revenue just doesn't normally go down, we don't do work and earn negative revenue although we do have expenses that bring net income down. Alright so then let's post this out, I'm going to make this a little bit smaller let's go down to about 80 on the task bar down here so we can see our general ledger and then we're going to scroll up to accounts receivable and I'm in cell S11, we're going to say equals and then point to that 8,000 and we got the 7,8 going up by 8,002, 15,8 we can see that here on the 15,8 on the trial balance then I'm going to go to the revenue account that's going to be a little over to the right over here so we have the revenue account down here and notice it only has credit balances we don't ever debit revenue for the most part because it just goes up I'm in cell AF20 in this case AF20 I'm going to say equals and I'm going to hold down the left arrow again I could use my mouse but I think it's a little bit easier to hold down the arrow until I hit the wall I'm going down to the last journal entry we did and I'm looking for that revenue account that 8,000 revenue and I'm going to say enter and we can see that that goes up so notice they should all be credits here if you see a debit in the revenue account probably went the wrong way it went up from 14,622,6 and what does that do to our trial balance puts us back in balance down here and our net income goes up to 22,2 being the 22,6 minus that 400 miscellaneous expense and we are very short on expenses right now we're gonna have some expenses most likely coming up as of the end of the month because that's when we pay our bills all right so then we're going to go down here to five squeeze one more in here 525 where we have cash received from clients for revenue earned during this month okay so now we received cash for work we did in the same time period so therefore is cash affected I'm gonna say yes we received it I'm gonna go ahead and make this a little bit larger we're gonna say yeah we received cash and therefore cash has a debit balance we're gonna make it go up how do we make something go up we do the same thing to it as what it is which in this case would be another debit right click copy the cash cow scrolling down to C29 right click pasted 123 the amount that we received was 4002 so 4002 on the debit side we're gonna have to credit something for that same amount being a credit represented by negative 4002 when we hit enter we'll see those brackets up here so there's the brackets now we're gonna have to say what will that account be and we're gonna say we got paid cash because we earned it we earned revenue and we earned it in the same time period in this case in the same month and so we could see our revenue account once again is down here it has a credit balance it only goes up for the most part and it has a credit balance represented by the brackets therefore we're gonna make it go up by doing the same thing to it which is another credit gonna copy that and we already knew that because we debited cash we can already we already have that credit over here gonna right click I'm gonna paste that 123 there's our journal entry gonna make this a little bit smaller again back down to 80 on the taskbar let's post this out so here's our cash account gonna scroll down and we're gonna go to the next line it's gonna go up with a debit so I'm in 014 sell 014 equals and point to that 4002 and enter and that makes the cash go up from 35 4 to 39 6 then we're looking for that revenue account over here so revenues over here somewhere gonna go to revenue it's a blue account notice it's an order the green accounts are assets orange accounts are liabilities then equity then revenue here's revenue it only has a credit balance gonna put equals in cell AF 22 and hold down the left arrow go down to the last transaction there it is there's that 4002 gonna say enter and the revenue goes up once again from 226 to 268 and what happens to the net income it goes up to 264 so that's the 268 minus the 400 and we're running out of room on the journal entries what we what we're gonna do at this time is unhide those cells that we hid earlier so that we can work on those cells so we can see up here we got a b c d e k and so there's some missing cells in there so I'm gonna unhide the cells between e and k by clicking on the cell e when it has an arrow such as this and then holding down the left click and dragging to the right so I get to cell L letting go and then I'm gonna right click on that selected area and unhide so there's that information now we're gonna start I'm gonna put the date here which is gonna be the next transaction on 527 and then I'm gonna go ahead and hide these cells I don't need to see these cells at this time now if there's a problem I'm gonna have to go ahead and unhide it and find it and whatnot but right now I just want to hide these cells so I'm gonna put my cursor on let's go to column B and I'm gonna click on that and then highlight and hold down to column F let go then I'm gonna right click on the selected area and hide that information so it's still there it's still all posted it's going from A to G we didn't delete it but we are now able to see what we want to see only alright so now we're down here on 527 says cash receive from clients for revenue earned in prior month and recorded in accounts receivable alright so is cash affected and it says cash is received so yes cash is affected cash is a debit balance we're gonna make it go up by doing the same thing to which in this case would be another debit so I'm gonna right click on that copy gonna put my cursor in h5 right click and paste it one two three but the amount that we received on the 27 is 12,000 we're gonna credit something for that same 12,000 so I'm in a credit column in J6 negative 12,000 and what are we gonna credit well we received cash from clients for revenue earned in the prior month that was recorded in accounts receivable so why are people pay us money cuz we did work but we didn't do work this time period we did it last time period therefore we have already recorded the fact that we are owed the money in the receivable account so that receivable account now needs to go down and it has a debit balance we need to make it go down by doing the opposite thing to it which is a credit which we already knew because we debited cash so we're gonna credit accounts receivable reducing that asset because we got the better asset and we're gonna increase the cash in this case so and note that there's no effect on the income statement on net income for this transaction copy and paste it one two three and that's because even though we got cash we recorded the revenue when we earned it and that was last month all right so now we're gonna post this out so we're gonna go into the cash account over here in cell oh 15 and say equals point to that 12,000 up here and when we hit it turned that the 39 6 will go up to 51 6 then we're gonna look for the receivable that's right over here right next to it and we're gonna I'm where I'm in cell T 12 and we're gonna say equals and point to that 12,000 this is a debit that's a credit that's gonna make the account go down look I missed it say equals and point to that 12,000 makes it go down there it goes all right down to 3008 we also see that 3008 over here and we can see that we are back in balance by the green zero meaning that the debits minus the credits equals zero and we are good back in balance ready to go to next transaction being on 528 all right so that says we paid employee for salaries incurred all right so we paid our employee for a salary that was incurred