 Hello in this presentation, we're going to complete the second half of the comprehensive problem Last time we completed the first half by entering the journal entries over here in the general journal Posting those to the general ledger on the side that then used to create the trial balance trial balance in balance here as we can see by the green zero meaning the debits minus the credits equal zero and net income is at 5,900 representing the 7,100 credit minus the debits this is an income and not a loss We then have the activity down here We have completed the left side of the activities from 5 3 down to 5 20 We will now be completing of this side 5 21 down to 5 31 you'll recall last time that we both froze the screen here and We had hidden some cells note that we have a b cd and then it goes to j on the worksheet First we're gonna need to unhide these cells and I'm gonna unfreeze the frame and then we're gonna Rehide some cells and refreeze the frame. So that's gonna be some some just set up work We're gonna have to figure out here. So first in order to unfreeze the frame I'm gonna go to the home tab. We're gonna go to the view tab and then we're gonna scroll down to the We're not gonna scroll down, but we're gonna go to the windows group And then we're gonna go to the freeze panes and we want to unfreeze the pain So we have that then I need to Unhide these rows here. So I'm gonna put my cursor right on that D So we hear that we see that arrow hold down the left click. I'm gonna drag from D to As far over as we need to go Let's go D to J and then we're gonna right click on that selected area and unhide Now we can see this data on this side And what we want to do is hide then these cells on this side So we want to hide cells A through E so that we can just see this data and our Information over here now note that as we do that that means that these our These entries will be posted and have been posted to the general ledger And they're gonna be hidden so we're not gonna be able to see those and go back to those So we want to make sure that these are all correct Before we do this because otherwise we're gonna have to unhide in order to go back So we know that we are zero here means that the debits equal the credits so we look good So I'm gonna go ahead and hide this. I'm gonna put my cursor right on the a Scroll over to the E I'll want the entire rows to be highlighted Then right click on the highlighted rows and we want to hide those cells All right, so now we have our information. We're gonna be working with this information over here So this is what we are looking at and We will use that to enter our data So I'm gonna scroll back up and we're gonna enter the data into this this area This is the general journal where we're gonna we're gonna Journalize the journal entries into this general journal and then we're gonna continue posting those to the general ledger accounts Note that the general ledger accounts do have information in them already because we have started this problem and worked half of it Already and then we're gonna use that that will be used then to automatically create the trial balance So that we can then see if we are in balance as we go next transaction we're on 521 says Recorded services provided but for which cash had not been received So we're gonna scroll back up here. We're on f5 521 we got services done cash not received therefore first question is cash affected We're gonna say no we did work and had not yet received the cash What did we get then we got an IOU an accounts receivable? Accounts receivable is an asset account. It's got a debit balance We're gonna make it go up by doing the same thing to it as it's normal balance another debit So I'm gonna copy accounts receivable. We're gonna put that on top in b5 right-click paste 1 2 3 The amount then is going to be and scroll back $8,000 scrolling back up h5 $8,000 we're gonna credit something for 8,000. I'm gonna do that with a formula negative of that number Then we just need to know the account why are people going to pay us 8,000 in the future because we did work and earned Revenue other accounts revenue. So we're gonna go down here to k17 Right-click copy that revenue. I'm gonna put that in g6 right-click paste 1 2 3 Double-click before the R and indent space bar three times All right, we're gonna post that now in order to post it I'm gonna try to freeze the frames once again, so I'm gonna scroll down just a bit so I'm on so I can see the II I can I can see just the rows 4 and And f here and then once I'm right there I want to freeze the frame right here So I'm gonna put my cursor right there and by doing that It'll tell the computer once I select freeze frame that I want to keep these frames open now If you do that and you're up here then you'll keep these these Cells as well, but I don't really need to see these cells up here So I'm gonna scroll down and I just want to have the screen look just like this and then go to the view tab And then in the windows group, we're gonna go to freeze panes and then go ahead and freeze panes What that will do then is when we scroll over here we'll have as optimal as possible to be able to see the screen and These cells over here will remain so that we can use them in order to create the journal entries So I'm gonna scroll back over here Now we're gonna post the accounts receivable That's the second account on the trial balance and therefore the second account on the GL So here it is we're on the debit side over here. Therefore. We will be on the debit side here We're gonna skip a line. We are in cell R10 So our 10 equals we're gonna point to this 8,000 once we select enter, then this is gonna increase by 8,000 so 8,000 plus the 3,000 is 8,300 8,000 plus 300 I should say is 8,300 so here's the 8,300 polls over here. We are now out of balance by 8,000 next we need to record the revenue or income account, which is all the way down here We got we got assets liabilities equity and then revenue way down here So it's gonna be in the same order on the general ledger where we have cash then we've got the liabilities then we've got the equity and Revenue revenue is gonna be down here. I'm gonna make it a bit smaller so that we can see a little bit more. I'm gonna say Down to 120. So here's the revenue. We're posting it down here in the credit side of the revenue account in cell AE 20 I'm gonna do it with a formula by saying equals and then point to this 8,000 when we select enter It's gonna increase the revenue here to 15,100 That same amount then will be pulled over to the trial balance. So if we scroll back over to the trial balance We see the 15,100 here net income then is going to increase Note that it went up to 15,100 minus the 800 minus the 400 gives us 13,900 in net income We are now in balance meaning of the debits minus the credits are zero therefore the debits equal the credits Next transaction. We're on 525 says Cash received from clients for revenue earned during this month. So I'm gonna say 525 is our next transaction 525 and first question is cash received. We're gonna say yes It says we received cash. So cash has a debit balance. We need to make it go up Therefore, we're gonna do the same thing to it which in this case is another debit So I'm gonna copy the cash. We're gonna put that on top in cell g8 right-click and paste 1,2,3 Scrolling back down. We could find the amount 4,200 the amount will be 4,200 scrolling back up 4,200 we know that we are going to credit something for 4,200 negative of that number then we just need to know what this other account will be So if we scroll back down received Cash received from clients for revenue earned during the month So what we are saying is we got this cash and we earned revenue in essence at the same time So we're going to then record the other side as we earned it to revenue Earning it being the time period in which we record revenue under the revenue recognition principle It's gonna copy revenue right-click and copy. We're gonna put that in cell g9 by right-clicking and pasting 1,2,3 then double-click before the R and Space three times and we'll indent that there's our journal entry now. We're gonna post this out. So here's our cash here It's gonna be the first account on the trial balance therefore the first account in the GL as well We're gonna find the new row and that will be in in 15 then we're gonna use a formula to post it that formula is Equals and then to point to that 4,200 that will then bring of this balance up by 4,200 to 38,800 that amount being posted to the trial balance here and Putting us out of balance there Then we're going to record the second side to revenue. So we're looking for the revenue account So we're gonna scroll back over scrolling back over Scrolling down to revenue. So here is our revenue account We're looking for this transaction to be posted to the credit side of the revenue account in cell AE 21 That will then equal pointing to this 4,200 that will bring this balance up Note that in the revenue account. We only have credits. That's all that happens to revenue. So it's up to 19,300 that same 19,300 then will be posted to the trial balance here We are in balance and we have net income of 19,300 minus the 800 minus the 400 bringing us to a net income of 18,100 remember that that is income representing credits over the debits of 18,100 credits of revenue debits of expenses Back Next we have cash received from client for revenue earned in prior month and recorded in accounts receivable So it's gonna be on 527. So we've got 527 here first question is cash received We're gonna say yes. It said cash was received cash has a debit balance We're gonna make it go up by doing the same thing to it, which is another debit. So I'm gonna copy the cash We're gonna put that on top in cell g 11 right-click and paste 1 2 3 Then we're gonna look for that amount for 527 being 1,200 scrolling back over we are in cell h 11 1,200 we're gonna have a credit for 1,200 then we just need to know what account this should be and Remember that we got the cash this time But now have not yet earned it or we earned it last month now We're recording the fact that we're receiving cash for an amount earned in the prior month And when it was earned it was also recorded in Receivable represent the fact that people owe us money We have receivable then being the balance we need so I'm gonna copy the receivable Putting that here in G12 right-click and paste 1 2 3 We're gonna then double-click before the a space three times and enter now What we need to do is post this out now note that we already knew that we're gonna credit the receivable because we deputed cash But if we think through it, we're gonna say our accounts receivable is a debit balance account It represents people owing us money if people have now paid us the money They don't owe us as much money and therefore this amount that needs to go down The way we make it go down is by doing the opposite thing to it as it's normal balance which in this case is a credit All right, so now we're gonna post this we've got the cash here It's gonna be the first to count on the trial balance. Therefore the first count on the GL We all want to be on the debit side new line we're in cell in 16 so in 16 equals then pointing to that 1200 that's gonna increase this debit amount by 1200 to 40,000 that Amount also being on the trial balance here Then we're gonna post the receivable second account second account on the trial balance of therefore second account on the GL We want to be on the credit side. Therefore. We will be here in cell s 11 Equals and then point to that 1200 that's gonna bring this debit balance down in the credit direction debits still winning by 7100 that number will also be reflected on the trial balance that will put us back in balance No effect on net income from this transaction next transaction We've got 528 paid employee for salaries incurred So we're gonna say 528 over here. I'm in cell f 14 528 and Paid salary. So we're gonna say is cash affected. Yes, it is we paid salaries Therefore cash is a debit balance. We need to make it go down by doing the opposite thing to it Which in this case is a credit. So I'm gonna copy cash We're gonna put that on the bottom. So here's the date We want to be on the bottom of that right-click and paste one two three amount then will be This eight thousand so alright, so eight hundred eight hundred So we're gonna start with the credit to cash of eight hundred If we credit something we also then to need to debit something for that same eight hundred The question then being what do we debit and we could see here that we look through this We've got the salaries expense. We're gonna debit the salaries expense all expenses have debit balances We already knew that we're gonna debit this because we credited cash I'm gonna copy this and put that on the debit side in G 14 right-click paste one two three Then I'm gonna double-click in front of the C. We're gonna double-click and indent that three times on the space bar Now we already knew that we were gonna debit the expense because we credited cash And therefore had to debit the expense But if we double-check it in our mind to get a better sense of what this account is doing We know that expenses have debit balances We know that it's going up in the debit direction because expenses always go up Therefore we do the same thing to it which in this case is another debit so we can double-check ourselves in that way We're then gonna post this out notice that this is way down here It's gonna be the assets liabilities equity income and then the expenses Same order on the GL. So when we post this, we're gonna scroll over. We got the assets. We got the liabilities We got the equity. We got the revenue. We're looking for salaries expense, which is here We want to be in the debit side next cell next row, which is a h 10 So within a h 10 we're gonna say that to equals point to this 800 and it's gonna equal h 14 Which will bring this $800 balance up to 1600 that same 1600 then will also be reported on the trial balance over here Here's the 1600 that puts us out of balance by 800 until we record the cash It brings net income down by 19 3 minus the 16 minus the 4 Then we're gonna record the cash That's gonna be on the first account on the trial balance and therefore the first account on the general ledger We are on the credit side and therefore we are in cell 017 that equals pointing to the cash of 800 and Enter that brings the 40,000 down to 39 to down by 800 that 39 to also being reported on the trial balance and putting us back in balance Next transaction We've got 530 paid cash for miscellaneous expense. So we're gonna go back over here 530 we'll say 530 First question is cash affected. We're gonna say yes. We paid cash cash as a debit balance We need to make it go down and therefore we're doing the opposite thing to it Which in this case is a credit. So we'll copy the cash copy cash I'm gonna put it on the bottom credit's going on the bottom. Here's our date Here's the bottom of the date right click and paste one two three Then we're gonna double click in front of the scene and dent three times and The amount then will be over here 530 280 so we're looking at that 200 or 250 250 so we'll scroll back up negative 250 credit side We're gonna debit something in H 417 then for 250 and all it gave us was miscellaneous expense So this is some type of expense that we don't typically have a category for and therefore putting it into miscellaneous Always are oftentimes being the bottom account on a trial balance. So I'm gonna copy that We're gonna put that on top miscellaneous expense in G 17 right click paste one two three There we have that we already know that we're gonna debit it because we credited cash But if we double check it we can say that Expenses always have debit balances they only go up in the debit direction and therefore we're going to debit this account in order to increase it and To record this note that the miscellaneous expense is on the very very bottom and therefore We're gonna have to go all the way to the end here. So we're on the general ledger It's goes assets and then liabilities then equity then income then expenses and we're way over here on the end in AL 22 so we're in miscellaneous expenses on the debit side in cell AL 22 that will then equal this 250 so it equals H 17 bringing the $400 balance up by 250 to 650 that same 650 will be found on the trial balance here 650 puts us out of balance by the 250 until we record the second half and Net income is 19,300 credits minus the debits giving us 17,000 50 Next thing that happens cash is going down with a credit Caches the first account on the trial balance and therefore first account on the general ledger We're looking to be at the credit side of it. So we're gonna scroll down to oh 18 18 will then equal this credit up to 50 once we select enter it'll bring that 39,200 down by 250 to 38,000 950 that amount then being the amount recorded on the trial balance and We are now back in balance Next transaction. We're gonna scroll back down here. We have a another miscellaneous on 531 paid miscellaneous for 300 so scrolling back over we have a 531 in F 20 531 and we're gonna say that cash is affected. It's going down Cash has a debit balance. We're gonna make it go down by doing the opposite thing to it Which in this case is a credit copy and cash putting it on the bottom. Here's the date We're gonna put it on the bottom here right-click and paste 123 amount then in I 21 we're gonna scroll back over in I 21 We want $300 in I 21 Scrolling back up. We're gonna put negative 300 Then we're gonna debit something for 300 and once again it went to miscellaneous We don't know what exactly we you know, we know what we pay for most likely But we don't have an account for it because it's not important enough or material enough to break out into its own account So we're putting it into miscellaneous account Right-click copy. We're gonna put that on top once again in G 20 right-click paste 123 Then double-clicking before this see I'm gonna indent this a bit double-click and space three times Now we're gonna go ahead and post this out and I remember we know that the miscellaneous was debited because we credited cash But we also know that it's an expense and all expenses are always debited. They always have a debit balance They only go up and therefore they go up with a debit by doing the same thing to it Now this expense of course is gonna be way over there once again It's the last account on the trial bound therefore last account on the general ledger Assets and then liabilities then equity then income then expenses miscellaneous expense way down here the last one we are in row a L and 23 on the debit side of the miscellaneous expenses in that cell We're gonna say that's equals and then point to this 300 in H 20 300 in H 20 is gonna bring this 650 balance up by 300 to 950 if we scroll back over that 950 will be here put us out of balance by the 300 until we record the second part and net income then went down 19,300 minus the 1600 minus the 950 Now we're gonna record the cash side of this cash up here first account on the trial balance first account on the general ledger Next area within the general ledger on the credit side in the cell O19 so O19 Will then equal and we're gonna point to that 300 so we've got 38,000 950 minus the 300 brings us down to 38,000 650 and that puts us back in balance over here on the trial balance next transaction We've got 531 cash from clients for work done in this month 531 So we're gonna say 531 is cash affected. We're gonna say yes It says cash was received from clients. Is that correct cash from clients? Yes So we're gonna say cash is a debit balance We're gonna make it to go up by doing the same thing to it which in this case is another debit So we'll copy the cash We'll put that on top in so g23 right-click and paste 1 2 3 Then we're gonna put the dollar amount which will be in this case $3,000 scrolling back over scrolling back up debit 3,000 to cash. We're going to credit something Now we just need to know what that credit will be in this case We earned the revenue at the same time. We got the cash and therefore We're gonna record revenue at the point in time. We earned it this point in time So we're gonna copy revenue put that on the bottom of our journal entry in cell g24 right-clicking and pasting 1 2 3 Double-click before the R to indent space bar three times Now we already knew that we're going to credit revenue because we debited cash But if we think through it revenue is an income statement account income statement accounts only go up Revenue is a normal credit balance and therefore only goes up in the credit back direction Which is why we are crediting it Crediting it here. Let's post this out cash first first account on the trial balance therefore first account on the general ledger next row that is ready and open is Uh row 20. We're on the debit side. So column in 20 is going to equal this 3000 Once we select enter, it's going to bring this balance up by three thousand two 41 650 that number then is also reported on the trial balance We are now out of balance by three thousand until we report the other side We've got the revenue account. That's going to be down here on the trial balance It's going to be assets liabilities equity and then revenue So we will then scroll over to the revenue on the general ledger Which also is in terms of assets and then liabilities then revenue So we are over here in a e And 22 so we are in the revenue account credit side Next available row being row 22 Is going to equal and then point to this 3000. So we've got the 19,300 plus the 3000 Balance at 22,300 Notice we only have credits in the revenue. It only goes up in the credit direction That same 22,300 will be represented on the trial balance Now we need to record. Uh, that's it. That's the whole thing Next transaction We're going to scroll back to all note that net income of course went up by this. So net income is the 22,300 minus the 1600 minus the 950 Therefore we are at net income not loss of 1970 Next transaction Service provided on account cash has not yet been received 530 We're going to say is cash affected and we're going to say no we did work and have not yet received cash What then did we get we got an iou that represented by accounts receivable So accounts receivable is a debit balance account. It's going up people owing us more money Therefore we're going to do the same thing to it as it's normal balance another debit So we'll copy k6 the accounts receivable Scroll down that's going to be put on top in g20 G26 right click and paste one two three The amount then will be if we scroll back over $2,000 So it's going to be 2000 in h26 $2,000 We're going to credit something for $2,000 the credit will then go to The accounts revenue account we earned the the revenue and therefore will record revenue at the point in time It is earned. So we'll copy revenue or income Paste that in g27 right click and paste one two three We'll then double click before the r space three times for an indentation Note that we already knew that we're going to credit the Revenue because we debited the receivable But we also know that revenue is a credit balance account It only goes up in the credit direction And therefore we do the same thing to it as its normal balance, which is a credit So we're going to post this out. We got accounts receivable here Scrolling up that's the second account on the trial balance and therefore second account on the gl We need to be on the debit side of the receivable account next row that is open is r12 I'm going to scroll down just a bit. We might I'm going to make this a bit smaller so we can see more of it on one screen So there we go. We can see this here is where we need to go. That's where this needs to go So I'm going to say in r12 equals This 2000 and once we select enter this balance will go up And put us out of balance over here This 9100 is what is now being reported here. I'm going to bring this back up. I'm going to go back up to 130 percent of the screen Next we have revenue is 2000 revenue is down here on the trial balance So it's a ways down assets liabilities equity and then revenue Same order over here assets liabilities equity revenue. Here's revenue We're on the credit side as always when recording revenue. We are in cell ae 23 Equals pointing to this 2000. That's going to bring this 22,300 balance up in the credit direction by 2002 24,300 that number also reported on the trial balance 24,300 we are now back in balance We see that net income is revenue minus expenses credits of 24 300 minus the debits of 1,006 and 950 for 21,950 Next transaction owner withdraws $10,000 last thing 531 We're going to say is cash affected And we're going to say the owner withdrew the money So it's it is affected and it's actually going down for the company. It's going up for the owner It's going down for the company. 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 is a credit. So I'm going to copy the cash We're going to put that on the bottom. Here's the date. We want to be on the bottom right click and paste 123 Double click in front of the sea Space three times. We're going to have a credit over here in i 30 of 10,000 negative 10,000 We will then debit something for 10,000 And now who took the money out the owner did so that's going to be part of the equity section. Remember, it's in order it's going to be um assets liability than equity And typically we make this other accounts kind of like in a contra equity account called draws So it's actually going to call draws if it was a corporation We'd be talking about dividends, which is a similar concept where the company is paying the owner So we're going to copy this We're going to put that on top in cell g 29 right click and paste 123 Now again, we knew that we're going to credit. We're going to debit draws because we credited cash draws is an account We don't see uh too often. So we got to think through that Know that uh draws is in the equity section, but it kind of acts like an expense Meaning it's a contra equity account in a way the equity account representing what is owed to the owner Kind of like a liability except the liability is owed to a third party The capital account is what is owed to the owner The draws is breaking out what has been paid to the owner and therefore it's going to be a debit balance account It's always going to go up in the debit direction and bring down the total credit balance So the net of all the equity is going to be decreased when draws go up Similar to how expenses behave in that they only go up in the debit direction and they decrease the total net credit of all equity accounts But the draws of course is not part of the net income calculation So that's going to be that we're going to post this out. Here's draws. Here's draws on the Trial balance going to be the same order assets liability equity on the general ledger Assets and then liabilities then equity. So we're over here in draws I'm going to make this a bit smaller so we can see more of the screen back down to 120 Back down to 110 And that's close enough close enough. So we are here in draws. We're on the debit side in ad Uh 14 I'm going to scroll down just a tab. We want to be there So this draws needs to be in cell ad 14 with a formula that formula of equals This 10 000 there when we select enter this will go up by 10 000 So there we have that I'm going to increase the size of the screen back up to 130 Scroll back over There's our draws out of balance by 10 000 draws is not affecting net income Next we're going to have cash. It's going to be a credit of 10 000 Here's cash. Here's cash on the general ledger We are on the credit side next row. Here it is in o 21 that then will equal this 10 000 So this 41 000 650 down by the 10 000 credit to 31 000 650 That amount then Recorded here on the trial balance back in balance here on the trial balance So that's going to be the completed problem. Note that then we're going to use this trial balance We'll have some adjusting entries that'll let you know, that's what we would do We would include some adjusting entries Uh a later topic and then make the financial statements from it Note what we can we can tell everything we want to know if the financial statements are recorded in this format in that I can see what my assets are. I can just highlight this and excel calculates it at 68 4 70 This might be pretty small, but note that it's just calculating down here very useful to have that Uh, we can see what the liabilities are. I just highlight those it's at 14 000 4 20 I can see what net income is. I can just highlight these credits minus debits means net income is 21 000 750 I could see what total equity is. I just highlight all the blue accounts That's 54 000 50 I could double check that number by recalculating it as assets minus liabilities So remember that number 54 000 50 also calculated as assets minus liabilities 54 000 50 So note that if we have the trial balance formatted in this way Really pretty efficient for us to get all the information we we need from it due to the debit and credit format and The use of formulas The the financial statements are actually a bit more bulky and a bit more difficult to deal with But we can't present this to anybody else Therefore, that's the reason that we would convert this information to financial statements