BASIC TRANSACTION 2

EX: 01 

Owner INVESTED $10,000 in the company.

Analysis of Transaction

Steps

Increase in Assets (cash) by $10,000                                                        DEBIT

Increase in Owner’s Equity by $10,000                                                    CREDIT

Journal Entry

	DEBIT	CREDIT
CASH	10,000
OWNER’S EQUITY		10,000

Description of Journal Entry

Owner INVESTED $10,000 in the company.

   Results of Journal Entry

Cash balance increases by $10,000.  --> Increase in Assets Owner's Equity balance increases by $10,000.  -->  Increase in Owner's Equity

EX:02

The company purchased $12,000 equipment and PAID IN CASH

Analysis of Transaction

Steps

Increase in Assets (Equipment) by $15,000                                                           DEBIT

Decrease in Assets (Cash) in by $15,000                                                               CREDIT

Journal Entry

	DEBIT	CREDIT
EQUIPMENT	15,000
CASH		10,000

   Description of Journal Entry

Purchased $12,000 equipment in cash.

   Results of Journal Entry

Equipment balance increases by $15,000.  --> Increase in Assets Cash balance decreases by $15,000.  -->  Decrease in Assets