 Hello in this presentation, we will be working a problem in Excel. You should have access to this Excel worksheet I highly recommend working through problems in Excel one because it's the closest thing We have towards going just paper and pencil. However, Excel will do some of the basic math So instead of having to plug those information in terms of adding and subtracting into a calculator We can start using Excel in order to do that and therefore Excel is better than paper and pencil and it's still close enough to paper and pencil that we can see the actual Calculations and see what's going on unlike what can be done Oftentimes within a database program where we don't have as much visualization in terms of what is happening So the paper and pencil is great because you can see you have to actually work through things and do the calculations and see what's going on not so great because you have to erase things and Recalculate things and punch things into a calculator, which can take a lot of time Databases are great in that they will make calculations very quickly But the problem with databases is that they often don't show all the processes Involved and you can't see the calculations as readily as you can in Excel Excel is really that area where you can see both the calculations and have the help needed in terms of speeding up the process of the calculations the other way reason to use the Excel sheets is that Excel is going to be really useful no matter where you are Even if you're not in the accounting department to learn in these basic skills within Excel is Something that you may as well be doing in accounting because that's the perfect place to do that and therefore We're going to learn some basic adding and subtracting and some formulas and just some cell references as we go through the accounting problems here We're going to have the problem work down here These will be the transactions We will be working through and we're going to be recording these transactions in accordance with the accounting equation that being assets equal liability plus owners equity remember if you're in a class that has Starting with stockholders or a corporation this equity section would be stockholders equity if it's a partnership It would be partnerships equity if it's a sole proprietor with the owner's equity as it is here However, the concept of the equity section as a whole is the same so keep that in mind We're going to have to then start memorizing the accounts that fall into these categories those accounts will be In terms of assets we have cash accounts seeable supplies Obviously, there could be more assets than this We're going to concentrate on these assets first in the future You're going to just start to memorize what types of accounts are asset accounts What types of accounts or liabilities what types of accounts are in the equity section and many times You'll just have an idea of it by the type of account that we're working with Liabilities we're going to be working with accounts payable and under revenue and the owner capital or the equity section Usually the most complicated section as we go through this because it has both the capital account Which we traditionally think of in the equity section as well as the entire income statement meaning The entire income statement accounts of revenue and expenses What we're going to do is we're going to record these transactions here each line recording abcd And then we're going to sum up the subtotal of these transactions And in so doing we'll see that we will be in balance When we record the transaction, hopefully we'll make sure that that is the case And then we will we will then put the balance down here and add up all the balances after each transaction So we can see not only that the transaction is in balance, but That our ending numbers will be in balance after the transaction has been made as well So let's see this first account. We have a says owner a deposits cash into the business checking account So we're going to say that we are the business That's going to be the first thing we want to understand here is that we're thinking In terms of the business the business being separate from the owner having a separate checking account First questions. I'm always going to ask going through these one is cash affected In this transactions, they will always be affected because we're actually working with the cash transactions here because I want to get Familiar with these first. I would like us to get familiar with transactions that have cash Because it really helps us to understand the rest of the transaction Once we fully understand the cash transactions, we can move to some other transactions that don't always have Cash we're going to move to account receivable and accounts payable cycles Even as we move to those cycles, however, many of the transactions will have cash and I recommend Working the cash side of any transaction first So first thing's question is cash affected and I'm going to say yeah cash is affected because we received cash And it's for 200,000 from the owner. So I'm going to type in 200,000 here from the owner That's 20,000 200 Thousand note that as we put the information in here, we can name the sale. This is b3 And I'm not going to put any commas in it or format it in any way And then when I hit enter or tab Excel will do the formatting for us as it has been instructed to do whatever the formatting selection is In this case, it's a it's a number format here and it'll put the comma in there for us Then we just need to see the other side of the transaction. So the next question is what other account is being affected The owner put the money in so the owner put this 200,000 in if we think about our accounting equation Assets equal liabilities plus equity, then it's probably the owner's equity section And within the owner's equity section, we got capital revenue and expenses and it will then be capital Then the question is is capital going up or down And note that we may not know that Just by the capital count, but we know that the cash went up and it's on this side of the equal sign And therefore this side of the equal sign must be going up as well in order to remain in balance So I know that this has to be an increase of 200,000 Therefore now the rest of these accounts There's not going to be any other thing happening for these accounts Depending on the type of database system if you're working a problem like this They may require you to actually enter a zero into these items I'm going to practice doing that just to practice within excel and get used to excel And put the zeros in all the other accounts that aren't affected here So I'm going to put zero in cell d3. This is cell d3 And I'm going to select tab and that'll actually go to the next cell And then I'm going to select tab again. You don't have to select tab You could just click in this item here, but if you start using tab as we go forward It will be a lot faster. So that's really what I would like to practice If just to practice within excel and supplies Zero tab tab So again, you could just click over here. We're in cell h3 Zero tab tab. We're in cell j3 zero tab tab already something there. I'm not going to change it Tab tab we're in cell in three zero tab tab. We're in cell p three zero tab tab And we are in cell r3 zero and enter that'll bring us back down to the bottom Now I'm going to scroll over to the right a little bit and this will give us some verification numbers that being That total assets are equivalent to total liabilities Net income is not affected net income being calculated as Revenue minus expenses. So when we see something happen to these accounts, then net income Something will happen to net income and we'll take a look at that as we go Note that within excel you can check this as well by just highlighting The numbers here and it'll say in the sum you can probably see it down here But in the sum function, it'll sum it up for you when you highlight, which is very nice to have I'm going to highlight the other side of the equal sign And then if I scroll down there's 200 000 on each side of the equal sign, therefore we are in balance Now I'm just going to bring the balance down. So I'm going to put the balance down here This is the only transaction we have so we're not adding anything up But I want to keep the balance Column or the balance row just so just to keep in conformity as the rest of the problem goes Next time we're going to have to take this as the beginning balance plus b We'll give us the ending balance here. It's our first transaction And then I'm just going to I'm just going to take that same number and put it down here Now we could do that by just typing in 200 000 again But I want to start using these basic formulas and the basic formulas I'm going to put in b4 I'm going to say equals and then point to that cell above it. I'm going to well hit the up arrow Okay, I'm going to hit enter. I'm going to hit equals and then the up arrow So equals and then the up arrow I note that if something gets messed up and you don't you can't get off the cell notice if I click somewhere else When I have this equal sign Then it's just going to keep changing the cell and if that happens what needs to happen is we want to start over again So you're just going to delete whatever's in the cell You can delete it here or you can delete it here and then start over So I'm going to select equals and then I'm going to select the up arrow to point to cell b3 You can also just type in equals b3 But using the keyboard will be much faster And then I'm going to select enter and then I'm going to do that over here This is the other account that was affected. So I'm going to say in l4 Equals and the up arrow one time. So that equals l3 So what that means is I'm just going to take whatever's in l3 and we're going to put that in l4 So the cell excel obviously sees this l3 as cell l3 and it's going to take whatever's in there the 200 000 And put it there Now i'm going to bring the rest of them down As well just to just to keep practicing with this and just to this is good practice just in terms of learning the keyboard So again, I would say Equals up one tab tab and we're just bringing down the zero So you could type in the zeros you could leave it blank But it's good practice just to go through here just to learn the excel we're going to say equals Up one tab tab equals up one tab tab Equals up one tab tab tab tab over the revenue equals up one tab tab Equals up one tab tab equals arrow up one and enter So now we've just brought these balance down. They're exactly the same numbers because it's the only transaction We have at this point in time. We're still in balance over here Meaning total assets equal total liabilities plus equity no impact on net income We're then going to go to the next transaction in b and just note when we go to this transaction We're starting with this number and we're pretty much ignoring column a now. We're not dealing with that anymore We're just dealing with b as the beginning numbers or the balance as the beginning numbers Then b transaction and then we'll have the next balance after the b transaction So the next one says receive cash for cash from client for work done 20 000 all right So then our first question will always be is cash affected and in this case it is all of these will have cash affected So we're going to say cash is affected cash is going up. Therefore, uh, we're going to increase cash So i'm going to put cash. I'm in cell b 5 20 000 i'm not putting any commas or anything in there because excel will format that for us Notice i'm in the cell right now if I put if I do an arrow or something like that I'll be off the cell Uh, but when i'm in the cell, it's not formatted if I want to get off the cell I have to select enter or tab and that'll that'll then format the cell now We're no longer on the cell and and just keep in mind when that happens So if you if you're in the cell and you're trying to move around Then you got to hit enter and you'll be able to move around All right, so the other side of this transaction receive cash From client for work done. So now we just got to see which is the other accounts affected here Now we did work it says we did work and therefore if we did work we earned Revenue so revenue is not the same thing as cash. We got cash at the same point in time But we actually earned revenue. So revenue is is in the owner's equity section It's an income statement account. The entire income statement is part of equity So here's revenue now. We know that 20 000 went up over here on the cash side And therefore this is on the other side of the equal sign So revenue must be going up in order for our accounting equation to remain in balance It's also good to double check this number as well and say well Does it if I didn't know the side was going up? Does it make sense that revenue would be going up? And you can think of revenue revenue really only goes up and never really goes down meaning The customers only pay us we do not typically pay the customers And therefore revenue is pretty much always going to go in one direction It's going to go up and it's always going to be increasing equity By the way, we could have done that for the 200 000 here. We knew 200 000 was going up in a Because cash went up But if we if we take a look at that we know that the capital account represents what is owed to the owner And if the owner put in 200 000 that means that the capital account should be increasing by 200 000 as well So the revenue account is going to go up. It always goes up. So it must be going up So it's going to go up 20 000 I'm going to go ahead and put in the zeros now for all the other accounts No other accounts is affected, of course, but we're going to practice the putting zeros in there Just practice excel. So I'm in cell d five zero tab tab f five zero tab tab h five is the cell we're in zero tab tab j five cell we're in zero tab tab l five cell we're in zero tab tab Then I'm going to tab tab to p five zero tab tab and finally r five zero and enter Now we can check if we are in balance for this transaction. This transaction has an equal number of Assets and liabilities. So we are in balance and there is an effect on net income Why? Because the income statement accounts revenue and expenses are affected here revenue went up. Therefore net income goes up Next transaction. Oh now we're going to bring down the balances. So remember here's our beginning balance We're not doing anything with a now because a just brought down the balance now We have this balance of 200 000 and we just added another 20 so we have 220 000 we need to bring that balance here now. I'm going to do this with a formula We're going to start working these these formulas what I want to do is say I want to say this cell plus this cell So I'm not going to say 200 000 plus 20 I'm going to say what this whatever's in this cell which is b this cell is b four Plus whatever's in this cell, which is b five So I could just type Equals b four plus b five But it's easier to use the arrows. I'm going to use the up arrow up arrow two times b four plus b five And enter so I'm going to do that again this time. I'm going to use the the mouse So I could say enter and point to the 200 000 that 200 000 Plus that 20 000 we're pointing to it just point and click. That's what we want to add up We want to say equals in order to tell excel that this is going to be a problem that we want here And we wanted to to do the calculation And then we're going to say that cell Which they'll put down as b four and then the plus sign that cell and that's what we want So then I'm going to select tab and obviously If anything goes wrong, you've got the old undo button up here and you can just delete the cell So go ahead and just delete it and then up to plus up one tab Now I'm going to do that for this cell over here This is the new thing that happened and I'm going to do this again I'm going to say equals that zero because it was zero in our prior balance Plus the 20 which means of course that we're bringing down that 20. Here's the 20 000 Now if I was to leave it there Note that we're not in balance here because obviously This is the balance column and we're only taking into account What happened in these two accounts and not the fact that this 200 000 happened In the in the prior transaction. So to bring this back in balance We need to bring this 200 000 down doing the same calculation equals The prior balance in l4 plus what happened this time nothing happened this time for the capital But there's that 200 000. So now we're in balance meaning The total assets equal the total liabilities plus equity. So you want to you know, check that every time, of course We could highlight it this way and check there's total assets 220 000. Here is the liabilities plus equity 220 So now I'm just gonna I'm going to do the the same thing to the rest just to practice this Bringing the zeros down, but I want to say this column the prior balance plus this column tab So that's going to be the routine. I'm in cell d6. So in cell d6, I'm going to say equals Up two plus up one So d4 plus d5 Tab tab. I'm in cell f6. I'm going to say equals up two plus up one Tab tab. We're now in cell h6. I'm going to say equals up two plus up one Tab tab. We're now in cell j6. We're going to say equals up two plus up one Tab tab tab tab tab all the way over to p6 We're going to say equals up two plus up one Tab tab and in r6 equals up two plus up one Now obviously that's a bit redundant to do all that just to bring the zeros down But it's a good practice that I'm we're trying to emphasize the fact that of course we're talking about the prior balance Plus what happened this time? All right now we're going to be on C and again remember that all this stuff up here looks kind of complicated But we don't need any of it at this time when calculating the part C We just needed this balance Then we're going to enter this data and that's going to then be added together to give us the balance after C Has been done so let's take a look at C where it says paid cash to employees 1200 question then is is cash affected and of course it is cash is affected and with all these transactions and Cash is going up or down in this case. We're saying we paid the employees now Remember whenever we look at these problems. We are not the employee where we may have more I experience being the employee and getting paid by Business but in this case, we are the business and therefore cash is going down for the business and of course up for the employees So it's going down for the business So I'm going to put a negative one two zero zero and then when we select enter The Excel is going to represent that negative with brackets and that's just the format of Excel It's pretty common to use brackets because they're generally easier to see so that's that's the format that Excel has Been put into in this problem Then we just need to know what the other side of this transaction and if we pay employees That's going to be something that we expended in order to help us generate revenue in the same time period That's the definition of an expense under the matching principle Expenses are part of the income statement account and the whole income statement accounts revenue and expenses are part of equity So over here way over here. We've got the expenses. Here's the expense now It's can be confusing to know whether the expenses going to bring equity up or down We know that this side went down the side of the equal sign Therefore if this is the other account then it must be going down. So I'm going to put a negative one two zero zero It's going down now We want to be able to double check that however does if we didn't know this side was going down How would we know this was going down bringing equity down? Well expenses are only go one way as well meaning we only pay the employees. They never pay us now Expenses are a little confusing when we consider them in relation to the accounting equation Because later we're gonna we're gonna give the idea that expenses only go up and they do obviously when we talk about expenses They're only gonna go up. We don't say that expenses are going negative We we say that expenses increase and as they increase they decrease net income calculated as revenue minus expenses But when we consider the expenses in terms of the equity section, we know that if they're bringing net income down Therefore the expenses are gonna bring the equity portion down So later on you're gonna have to just keep that in mind expenses go up But they bring total equity down because they're bringing net income down net income calculated as Revenue minus expenses. So that's gonna be our transaction. Of course, this transaction is now in balance total assets equal Liabilities plus equity. I'm gonna then bring down the rest of the balances here. So we are now in cell D7 I'm just gonna put zero tab tab zero tab tab zero tab tab zero tab tab Again, you don't have to do this you can leave them blank But if you work some book problems, they'll require the zeros. So it's it's kind of Useful to do and it's good practice to just work through the tabs because it's really good practice to do that So I'm gonna say zero tap tab zero tap tap tap zero and enter All right, so now we're gonna bring these balances down. So we've got the prior balance here That's what happened before this transaction. That's where we were at We don't need to worry about any of this stuff up here We're gonna take this prior balance plus what happened in part C and that will give us our new total So I'm gonna go back over here. Now if I was to do this in a calculator with a calculator I should say then we should have 220,000 minus 1,002 Now if we're working Excel, however, we need to be mindful of Whether or not this number is a negative number or not So this number we represented as a negative number Therefore what we need to do is this plus this cell if I sum these two up we get the 218 meaning it's subtracted it why because this is a negative number So when we do the calculation we can do this a few different ways We could we could just type in the number and do it in a calculator, but we want to use Excel So we could say it equals this cell Plus I'm gonna go up one that cell and And so it's beats itself B6 plus B7 will do the subtraction problem 120,000 minus 1200 However, it would be better for us to use the Sum function so what we're gonna do is learn. This is the most useful function by far in Excel and so it's best just to pick it up You can do it a few different ways you can go to the home tab and use this auto sum function But it's best just to type just to learn to type it in there There's some other shortcuts, but the sum function is gonna be equals SUM and then there's the sum function So I'm gonna double click on it and then I'm gonna highlight these two cells So there's there's our function we could close it up We don't really have to because Excel will put that parentheses in when we select enter So just recall this looks like a complicated formula But note that all you have to do is start typing equals an s Su and it'll it'll you'll see the sum function pop up and then just highlight this cell What this function means is that we're gonna sum the cells from B6 to B7 Meaning the cells within that that highlighted group. This is cell B6 to B7 So that's gonna be that I'm gonna do that a few more times in these other transactions So we'll do that the new thing that happened was over here in cell piece eight So I'm gonna do the same thing equals SUM and then I'm gonna double click that sum function and Highlight the zero and the one thousand two hundred because that's the prior balance plus what we did this time Giving us the one thousand two hundred So note that those are the two transactions that happened in part C But we're not in balance, of course Because we need to take into account in the balance column all the other stuff that happened before C happened We need to bring down all the rest of the balances So I'm gonna start that here because we got to bring that 200 down So I'm in cell L eight same some function equals SUM double click on the sum highlight the two hundred and the zero and enter We're gonna do the same thing over here in in eight some same some function equals SUM brackets we're gonna highlight the twenty thousand and of the zero and Enter so there we have that so that should bring us in balance I believe so we're back in balance and we can do we can double-check that this way We can say all these just highlight them and excel will calculate it down here down here as 218 800 and then we can highlight all of these on the other side of the equals sign and We see that we have 218 800 be mindful However that this is being subtracted because this is a negative number So when I highlight this it's saying 200,000 plus 20 minus the negative number gives us the two 18 800 next I'm gonna sum these up just to finish the sum function although they are zero so it just practice the sum function We say SUM and this time I'm gonna I'm gonna finish the function just with the keyboard I'm gonna hit shift nine. That's that's gonna be the bracket key And then I'm gonna hit the up arrow one time Hold down shift and the up arrow again. So that might be a bit complicated You could you could just use the mouse, but I'm gonna do this a couple more times just to practice that then we select tab tab Equals I'm gonna type SUM Shift nine for the bracket up arrow one time and then hold down shift And then the up arrow again, and that'll that'll do the whole thing if he gets messed up Just delete it and and hit the undo button and then do it again. I'm gonna say tab tab Equals SUM hold down shift nine for the brackets the up arrow one time Hold down shift so it'll it'll make the block and then there you go And then tab tab and then equals SUM shift nine up one arrow hold down shift up arrow again and Tab tab tab tab tab tab tab tab one more time utilities and so our eight equals SUM hold down shift nine up arrow one time hold down shift up arrow again and Enter so there we have that Alright, and again you could just put the zeros in there manually or you or you could you could use that function, but it's good practice to practice the sum function Next item we're saying D Received cash for work that will be done in the future that should be we're gonna do work in the future And we already got the cash So I'm gonna say cash is is cash-infected that being the first question for Transaction D and of course it is we got cash received cash So I'm gonna say 30,000 for the cash and then the question is what's the other side of this transaction? Why did people pay us cash people pay us because we're gonna do work, of course But the key point here is that we are going to do work and have not yet done work at this point in time Therefore we can't increase the revenue account as we would like to do even though we got the cash under an accrual system Because we had we recognize revenue under the revenue recognition principle when it is earned and it has not yet been earned Although it has been received. We need to earn it in the future through some type of service Whatever it is we do as the company therefore the other side will go to unearned revenue unearned revenue notice It's a liability account Representing the fact that we owe something in the future not the thirty thousand dollars But the thirty thousand worth of work and if we don't do the work then we owe the thirty thousand dollars But hopefully we're gonna do the work and we're gonna keep the thirty thousand dollars We're gonna increase this by thirty Thousand and again, we know that two different ways if we do cash first I know that this side went up and that side of the equal sign went up Therefore this side of the equal sign must go up and if that's the account affected it must go up Also, I can double-check that it should be going up if I had not known that cash went up Then is it correct that unearned revenue would go up? Well, yeah, it's a liability account. We owe something in the future. Therefore, it's gonna be increased So we're gonna have to increase it. All right That's the transaction and we could see that our transaction is in balance here total assets equaling total liabilities plus owners equity Now I'm just gonna bring down the rest of the zeros. I'm gonna say I'm in cell D9 zero tap tab F9 zero Tap tab cell H9 zero tap tap tap So nine L9 zero tap tab cell N9 zero tap tab Cell P9 zero tap tab and cell R9 zero and enter Next we're gonna bring down the balances now. So remember we're talking about this is the previous balance Everything above that not worried about at all at this point in time We are only worried about this line previous balance plus transaction that we have just done This transaction here and we need to sum those up as we did last time So I'm gonna go ahead and sum these up I'm gonna scroll down just a little bit so we can see that I'm gonna say equals SUM and I'm gonna double-click on the sum function and then highlight these two again So there's some B8 colon B9 and enter Then we're gonna I'm gonna scroll over to the new transaction that happened over here in J10 Equals SUM double-click highlight those two cells and Sum of J8 colon J9 and enter So that's our new transactions and note that we are not of course in balance at this point in time We need to bring down the rest of the balances. So I'm gonna bring down these balances. I'm in L10 Equals SUM and I'm gonna double-click the sum function highlight the 200 and the zero Gonna do the same for N10 equals SUM Gonna highlight the 20 and the zero Do the same for cell P 10 equals SUM Double-click the sum function highlight the 1002 and the zero That's all the cells with the data that should bring us in balance as it does So total assets equal total liabilities plus equity net income is at 18,300 Calculated as revenue here scroll up a little bit revenue minus the expenses that gives us the 18 800 and We can also double-check that we are in balance by just highlighting with Excel this side of the equal sign adding up to 248 800 and then this side of the equal sign adding up to 248 800 then we can bring down the the rest of the zeros I'm gonna do the sum function again just to practice. I'm gonna highlight I'm gonna add up the zero and this zero using the sum function. So we're gonna say equals SUM I'm gonna use just the keyboard this time bracket 9 up one hold down shift up to Tab tab we're in cell F 10 Equals SUM shift 9 up arrow one time hold down shift up arrow again Tab tab we're in cell H 10 Equals SUM Shift 9 up arrow one time hold down shift up arrow again Tab tab tab tab tab tab tab tab tab tab all the way to the end We are in cell R10 Equals SUM hold down shift 9 up arrow one time hold down shift up arrow again and enter All right, so that's gonna be part D. We are now on part E Which says paid cash for utilities? 1500 so we paid cash for utilities first question as always is cash affected We're gonna say yes cash is affected. It's going up. We I mean it's going down We paid cash for utilities so in cell B 10 or B 11 We're gonna have a negative 1500 so I'm gonna say negative one what happened Negative 1 500 and of course we can see the negative there, but I'm not gonna put brackets around it Or I'm not gonna put the the comma I'm just gonna select enter and it will then format with brackets excel seen those brackets as a negative number Now we paid that 1,500 for utilities. So what's the other side of the transaction? Utilities we typically would think is something that we expended in order to help us generate revenue And that's the definition of an expense. That's the matching principle Expenses are part of the income statement and the entire income statement is part of the equity section So way over here. We've got the expenses. That's gonna be our last column and scroll down last calm I'm gonna be over here in our 11 question then is will the expenses be going up or down? One way to answer that is that this side of the equal sign went down Therefore this side of the equal sign must be going down Then we double check our work by being able to say well Utilities expense should it be going down if I had not known what was going on with cash Utilities expense will bring down equity because it's bringing down revenue So any time you know it's bringing down net income. So anytime net income goes down that will also bring down equity How is net income going down? Because revenue minus expenses will bring down net income So this this negative number represents the fact that the expenses are decreasing the equity section But keep in mind that expenses will generally only go up. We don't say expenses go down Although expenses decrease the equity section. So keep that in mind as we go The the negative number represents that equity is going down by the expense But later on we're gonna be talking about expenses always going in one direction going up and net income being calculated as Revenue minus expenses. So that should put us in balance. So in this transaction We are in balance and net income is affected. It's going down by the 1,500 utility I'm gonna go ahead and put in the zeros to the rest of the transactions I'm gonna say I'm in cell D 11 zero tap tab f 11 zero tap tab h 11 zero tap tab J 11 zero tap tab l 11 zero tap tab in 11 zero tap tab P 11 zero tap tab and enter Now we're gonna bring down the balance. So remember what we are doing is looking at the prior balance here Not concerned with anything above that prior balance But only concerned with those transaction that transaction below that balance We're gonna sum up these as we go all the way across starting with cell B 12 We're gonna say equals SUM Double-click some function highlight the two cells and we have some Enter now note that of course. This is a negative number So if we were to do this in a calculator, we'd say 248 800 minus 1500 but when we add them we need to add them here meaning Excel sees this as summing or adding This positive number plus a negative plus a negative will result in a subtraction problem Which is what we want. So then we're gonna go over here. This is the new thing that happened in R 12 I'm gonna sum these up equals SUM Double-click the SUM highlight the cells and enter and There we have that it's gonna be a negative number Those are the new things that happened But of course we are not in balance because we need to bring down the rest of the balances that were in This cell column or row 10 So I'm gonna go ahead and do that the items with the numbers first over here in a J 12 I'm gonna bring down that 30 the 200 the 20 But I'm gonna sum up the 30 and the zero This way equals the SUM Double-click the sum highlight the prior balance and the current activity enter gonna do the same for L 12 equals SUM Double-click the sum function highlighting the prior balance plus the activity and enter in cell in 12 equals SUM Double-click highlighting the prior balance plus the activity and enter in cell P 12 equals SUM double-click the sum function highlight the prior activity plus prior balance plus the current activity and enter Next I'm gonna do the same thing, but just for the zero balances only using the keyboard. We're gonna say equals SUM Shift 9 brackets up arrow one time hold down shift up arrow tab tab I'm in cell F 12 equals SUM shift 9 up arrow one time hold down shift up arrow and Tab tab in cell F 12 H 12 Equals SUM Shift 9 up arrow one time hold down shift up arrow again and enter So now we just brought down the rest of those zeros We can see that we are in balance if we scroll over here total assets equaling total liabilities plus equity net income now being calculated at 17,300 which is revenue. This is the revenue account if we scroll back up revenue minus the expenses 17-3 if we want to verify that we are in balance as well we can we can highlight the assets assets are these items here 247-3 and we can highlight the liabilities in equity here 247-3 Last transaction transaction F paid cash for supplies $700 first question is cash affected. This is the cash count. I know we can't see it up there But this is the cash count as we've seen all the way through here and cash is affected We're paying cash and therefore cash is gonna go down. So I'm gonna say negative 700 when we select enter we know that the cell will then format with those brackets as Like so and we paid the 700 for supplies So supplies you might be thinking that supplies is something that we consumed in order to help generate revenue And therefore should be an expense and it will be expensed at some point But note that when we purchase the supplies we have not yet consumed the supplies We're gonna consume them in the future in order to help us generate revenue in the future at some point That's the definition of an asset. So this is kind of like our our Introduction to inventory meaning we're gonna track the supplies in a similar way that we would track inventory Putting all the supplies into an asset account then counting the supplies at the end of the time period and then writing down the supplies asset account and recording the related expense account as the supplies are Consumed so in this case, it's gonna be an asset So this this one's kind of tricky in that we know that this went down over here And this is on the same side of the equal sign. So it must then be going up So note that when you work with the accounting equation, it is not the case That we have to have one account in one of each transaction As is often thought when we first start working with this accounting equation meaning it's very possible to have two Accounts that are both assets Resulting in no net effect on the accounting equation meaning no net assets didn't go up or down Liabilities didn't go up or down or equity didn't go up or down What did happen? One asset account went up and or this asset account went up and one asset account went down So no activity or no result in total assets One's going up one's going down. However All right, so then we're gonna bring down the balances. I'm in B 14. I'm gonna say equals SUM and Double-click the sum function highlight the 247 3 and the 7 and of course this is a subtraction problem Because we are taking the positive number plus that negative number and excel sees the sum function as subtracting due to it Being a negative number then in F 14 equals SUM Double-click the sum function highlight the zero and the 700 and enter Those are the two new Transactions, but of course we are not in balance due to the fact that we haven't brought down all the other balances that were involved from the prior Transactions, which we will now do so I'm going to go over here to the to the transactions that have data in them first starting with This transaction over here. Actually, I should have gone back and put in the zeros too So let's go ahead and let's go up here and put in all the zeros. So on D 13 I'm gonna say zero tap tap tap tab zero tap tab zero tap tab Zero tap tab zero tap tab zero tap tab and zero Okay, so and and again you could leave those without the zeros it won't hurt But it's nice to put the zeros in there and some problems will require it depending on the database program You are using if you're working out at a campus or something and working through these problems. All right, then we're gonna sum these up I'm gonna be Summing up these first. I'm in cell J 14 Equals SUM double-click the sum function highlight the 30 and the zero and I'm gonna select tab this time tab tab we are in L 14 equals SUM and Double-click the sum function highlight the 200 and the zero Tab tab we are now in cell N 14 equals the sum SUM double-click sum function highlight the 20 and the zero tab tab in cell P 14 Equals SUM double-click the sum function highlight the 1002 and the zero tab tab We are now in R 14 Equals SUM double-click the sum function highlight the one five and the zero and enter Finally, I'm just gonna bring down the last couple zero Calculations using the sum function. However only using the keyboard equals SUM Shift nine up arrow one time hold down shift up arrow a second time and tab tab tab tab we're in cell H 14 Equals SUM shift F shift shift nine up arrow one time hold down shift up arrow again and enter and Finally, we should be hopefully in balance. So if we scroll back over here, we are in balance here We see that net income now still remaining at 17,300 Calculated as revenue minus expenses scrolling back down revenue minus expenses 17 3 and we can double-check that the entire thing is in balance using Excel by just highlighting B 14 to H F 14 which is 247,300 then highlighting the other side of the equal sign the liabilities in H 14 through our 14 giving us the 247 300 therefore we are in balance Remember that when we highlight these it's really zero plus 30 plus 200 plus 20 minus 1002 minus 1500 that's what Excel is calculating due to the format here being negative numbers in P 14 and cell R 14