 Step two in the accounting cycle is journalizing transactions. This is the process whereby financial transactions are recorded into the accounting records of a company. Transactions are recorded with a journal entry. These journal entries become the chronological list of all the transactions, and that list is known as the general journal. Journal entries have four parts. A date of the transaction. The account debited and the dollar amount debited. The account credited and the dollar amount of the credit. And finally a brief explanation of the transaction. This slide is a visual example of a journal entry. You can see the date section, where the accounts are listed, the debit and credit column, and finally where the explanation is shown. So let's look at the three transactions we previously analyzed and see if we can journalize them. In this example a company buys supplies on account for $500 on August 3rd. When we analyze this transaction, we determine that supplies, an asset account, is increased with a debit, and accounts payable, a liability account, is increased with a credit. So first we enter the date, August 3rd. Then we list the debit account first, so we enter supplies. It wouldn't technically be wrong to list the credit account first, but it would look wrong to every practicing accountant. So always enter the debit accounts first. Then we would record $500 in the debit column. Next we enter accounts payable as the credit account. Normally we indent credits as you can see here. And finally we enter $500 into the credit column. We enter the description of the transaction at the bottom. Often in accounting homework you won't need to enter a description, but you should be aware that in real life, journal entries always have at least this type of documentation. And now we're done. We've entered this transaction into the general journal by completing a journal entry. Let's look at another example. A company performs service on account for $2,500 on August 9th. We analyzed this transaction and determined that accounts receivable, an asset account, is increased with a debit. Service revenue, a revenue account, is increased with a credit. So we'll enter the date, August 9th. We will then list the debit account, so we enter accounts receivable, and in the debit column we'll enter $2,500. Next we'll enter service revenue as the credit account. We'll want to indent the credit, and then enter $2,500 in the credit column. Finally we would enter the transaction, and we're done. We've entered this transaction into the general journal. The last example, a company pays a utility bill for $200 on August 15th. When we analyze this transaction, we determine the cash, an asset account is decreased with a credit, and utilities expense, an expense account, is increased with a debit. So we'll enter the date, August 15th. We will then list the debit account first, so we will enter utilities expense, and then $200 in the debit column. Next we enter cash in the credit account. We'll want to indent cash, as you can see here, and then $200 in the credit column. Finally we would enter a description for this transaction. And we've now entered this transaction into the general journal. I hope these brief examples have helped you understand the journalizing transaction step in the accounting cycle. One hint I would like you to remember. Once you've analyzed the transaction, you don't need to reanalyze them when you journalize them. Just enter the date, the debit account and amount, the credit account and amount, and the description if the problem asks for it. No additional analysis needed.