 Hello, in this presentation, we will work short calculation questions, calculation questions that could be found in multiple choice or short answer format. We will be working with accounting concepts and debits and credits, recording transactions and working with debits and credits. First question. The cash account had a normal balance of $5,600. During the month, the account was debited for a total of $12,800 and credited for a total of $12,100. What was the balance in the cash account at the beginning of the month? The traditional way to set up these types of accounts is with a T account. So I'm going to put a T account here. We could format these and think about them in different ways, but of course the point is we're looking at debits and credits. T accounts almost work better when we're calculating things by hand, but I'm going to put the T account into Excel. If you're going to do this by hand, T accounts work great. If you put them into Excel, it's still a good format for us to look at and I'll show you how to do that. So I'm going to format this cell a bit just so we can have a T. So I'm going to format the cells. I'm going to go to the alignment tab. We're going to go to horizontal formatting. What I'm doing is I'm just going to center across that selection. And what that does is I'm just centering across these two cells without merging the cells. You can actually merge the cells as well if you so choose. But that's just a formatting issue. I'm going to go ahead and underline that home tab font and underline that and there's our T account. If you want, if you want the line in the middle, you can actually put another line here, home tab font and then select this cells and you want the line on the left in this case and there would be our T. Now when we consider this note, it can be confusing these, these types of problems because we're going to back into certain things. We're going to do things kind of backwards. That's how they basically test the knowledge within these multiple choice questions. And one of the reasons the multiple choice questions are sometimes more difficult than working in an extended problem where we're actually doing everything. And in this case, if we read the whole problem, we might start off thinking that this balance here should be where we start, meaning the beginning balance. But in reality, that's going to be the ending balance and the way we know that is that we have here is that what's the balance in the cash account at the beginning. That's what we're looking for then. We're looking for this number. We're looking for the beginning balance. Or the cash account having normal balance of 5600. We have to assume that that's the ending balance. So that's what we're going to end up with right there. It's going to be a debit normal balance. We just have to memorize that cash accounts have normal debit balances. I'm going to draw a line above that because that's where we want to end. I'm going to do that by going to the home tab font and we're going to underline the bottom. So that's what we're going to end at. And then we're going to put in our information. We're going to start with, in this case, we don't know. And then during the month, it was debited. So we're going to debit the 12, 8 and credit during the month. And I'm going to put the credits for myself in there as a negative. And you don't have to do that, but that's how I remember seeing these things. And there we have that. So that's going to be our calculation. We got this minus this plus this is going to have to equal that. In other words, the debits, if I was asked to add them up and I was adding up the credits, the debits minus the credits should equal that. So we can think about that in the format of an equation, meaning if I'm going to say that this is X, I'm going to say X plus something minus this has got to equal that. I'm going to say that the formula could be X plus this 12,800 minus the 12,100 has got to equal the five six. So that's one way we can we can work this problem in terms of a formula. So if we were to work that out here, I'm going to work that out over here. We can say that we have X and that's going to be adding to. And then I'm just going to say, and by the way, this should not be a point eight. That should be a comma. And so we're going to say that's going to be equal to and if we do the subtraction 12,8 minus 12,1, we get the 700 and that's going to be equal to the five six. And then of course, we're going to subtract the 700 from both sides, 700 and 700. And that means that X, X would then be adding to I'm going to do the math here, 700 minus 700 is zero equal and we do the math here, five six minus 700 would be four nine therefore X would be equal to that 4,900. Therefore if we put that in and kind of check our work, we can say that this number has to equal that and then check our work. We're going to say this plus this minus that has got to equal the five thousand six and it does. We can also sum them up this way. We can say the sum of the four nine plus the 12,8 the sum of the debits, we can put an underline here and the sum of the credits, which has got to be these is the 12,1. If we take the difference, the 17,7 minus the 12,1 we get the five six and that's another way you can kind of think of your formula if you can try to add up and say the debits minus the credits total debits minus total credits have to equal that five thousand six that's one way to think of it. We kind of thought of it here as a running balance and the running balance kind of idea would be that we could just take this is going to be the beginning balance and then if we were to have a running balance, we would have the prior balance plus the debit and the credit or in this case plus the sum of these and because I put the credits in there as a negative, it'll subtract out the credits. And so then we would have that and then we would have the same thing here. This would be this plus the sum of this and this and of course that when I sum them up, it's going to subtract out this negative number. I have the credits in there as a negative and yes, and so that's going to bring it down. So here's our running balance and of course we get to this same, the same indie number. So when we consider how we're getting to the total debits and credits, typically in a T account format, we're going to add up the debits, we're going to add up the credits and take the difference. But it's useful to think about it at the same time as more of a general ledger type of format where we have this running balance. And that's just going to take the prior balance plus the debits minus the credits if it's a debit normal balance account as cash is and we'll have the same calculation. And that will help us to kind of put together this algebraic formula so that we can figure out something like this where we're trying to back in to this number. Next question. Received its telephone bill in the amount of 340 and immediately paid it. General journal entry to record this transaction will include a note that this type of transaction, this type of question is asking for a journal entry type of transaction. But it says will include a, so if this is in the multiple choice format, then it may only give you, it probably will be only given you one side of the transaction. And therefore you might be tempted to take a shortcut and not write down the transaction and just look for that one side of the transaction. That's kind of a trick on the multiple choice questions because by doing so, you are eliminating the value of the double entry accounting system, which is basically to check your work. You're eliminating that double check of yourself to eliminate the possibility for errors. That's the whole point of the double entry accounting system. So what I would highly recommend doing is even if they don't give you a number, even if they don't ask you for the debit and credit for a transaction, write down the transaction because that's your check against making an error. And then look for whatever piece they're going for and make sure that you're going the right way in terms of debiting and crediting correct the correct account when looking for the answer. So in this case, received its telephone bill in the amount of 340 and immediately paid it. Therefore I would first think about cash is cash affected, we're going to say, yeah, paid cash. So I'd write that down. And I'm going to put that on the credit side. I'm going to represent it with a negative 340 note that the credit's going to go on the bottom typically, but I'm still going to think of that first because that's going to help us to then see what else is happening. That's the easiest thing to think about. Note also that if you're talking about a multiple choice question, they're probably not going to ask you about cash because that's an easy account to deal with. Everybody can probably figure that out. And that's kind of why they're only giving you half the journal entry possibly too because they're trying to make the problem a little bit more difficult. Note that if you write down the journal entry and write down the cash first, you're far less likely to go the wrong way in posting the debit half of the transaction. Okay, so the debit side is going to be recorded for the telephone bill. So it'd be something like telephone expense, right? That's what we got. We consume the telephone expense in order to help generate revenue. Yes, I spelled that wrong, but that's okay. Now, they're also probably going to ask you in a multiple choice type question. They're probably not going to give you the whole thing. One of the answers will probably be a debit to telephone expense. One will almost definitely be a credit to telephone expense. And then they might have possibly cash going the wrong way or a couple other accounts. Obviously, if a multiple choice question like this is probably counting on going the wrong way in posting the credit to the telephone expense to get something like this incorrect. Next question, received 1260 cash from a customer for services to be provided next month given the choices below determine the general journal entry that the company will make to record this transaction. So this is going to be asking for a journal entry here. Note that if we're in a multiple choice format, then they could give you the entire journal entry or they may give you just a component of the journal entry. That second one often being more likely, but of course, I would recommend writing down the entire journal entry in order to use the double entry accounting system to eliminate the possibility of having errors. So let's take a look at what we would have here. Received cash. Now, first question is cash affected? Yep, we received cash and cash has a normal debit balance. We're going to make it go up by doing the same thing to it, which in this case is another debit. So that's the first thing I would write down write down cash and if that if that line of questioning doesn't make sense, I would go back and just look at your normal debits and credits and get that line of questioning down. If you're at a situation where you can have a cheat sheet in front of you, I recommend having a cheat sheet in front of you in order to work through these types of problems. We can have it in multiple formats. It looks something like this. You can, you know, you can even get it on a coffee cup here where you got the cheat sheet of your debits and your credit accounts, cash being a debit balance account. And therefore we're going to make it go up in the debit direction. So that's what I would recommend doing here. Now they're probably not going to ask you for cash 12,060 because again cash is going to be fairly easy for us to know whether it goes up or down. And they're depending on us messing up the other side of the journal entry. But by us recording cash first, we're less likely to have a problem on the second half of the transaction. For example, we know that if we debit cash, we're going to credit something for that same amount. And then we just need to know what that amount is going to be. So they're probably not going to ask you for cash in a multiple choice question. And we know then at least if there's only two accounts, like there are for many of the transactions we start with, that we're at least we're going to be crediting something and we got to determine what we are going to credit. Now we received cash from a customer for services, which may immediately make us think, well, we should be crediting service revenue. But then it says they're going to do the work next month. And that should trigger in our mind, well, we haven't earned it yet. So we can't really credit revenue as we would like to do that would increase revenue if we had earned the cash at this point in time, the revenue at this point in time. We would then credit revenue, but we have not earned the revenue at this point in time. And therefore we're going to have to put it into a liability account, which is going to be in this case unearned revenue. Now it depends on the type of company it could whatever the business is, if it was a, you know, if it was rental company would be unearned rental revenue. If it was if we did lawn keeping, it might be unearned lawn service revenue or something like that. But the principle is it's going to be unearned revenue. Note that we already know it's a credit. So if we had to look that up, we can see it's a credit. If we needed to check that, we would know that unearned revenue, if we had a trial balance or a cheat sheet, we can see it's a liability account, unearned revenue is a liability account. It's going up because we owe something in the future. We owe our work in the future. And therefore we got to increase the credit balance. And the way we increase any account is we do the same thing to it as its normal balance normal balance here being a credit, we will then credit it to make it go up. So that's going to be the transaction. I can ask you anything about this journal entry when you're looking at a multiple choice question but they will probably be focusing in on the credit to unearned revenue, it being the more abstract, unusual type of account, the account that we don't deal with all the time.