00:01
In this example, we're going to be talking about adjusting entries.
00:04
Let's look at a few examples.
00:06
The first one.
00:07
Paid $1 ,700 for salaries due to employees, of which $700 is for the month prior.
00:16
Well, first off, we have given cash of $1 ,700.
00:25
So we have a credit to cash, our assets decrease.
00:29
$700 of this was for the prior month salaries.
00:31
So this means we had salaries and wages payable.
00:36
And i'm going to abbreviate here s slash w.
00:40
Salaries and wages payable of 700.
00:43
And salaries and wages expense of 1 ,000 would be for the current period.
00:49
So this is a three line adjustment.
00:53
The next one, received $3 ,620 cash from customers on account.
01:01
This means that our customers previously owned.
01:04
Us and they gave us cash.
01:08
So we need to increase our cash by debiting it and we need to decrease our accounts receivable to show that they no longer owe us this money on account.
01:19
Received cash for services performed.
01:22
We received cash so our cash would increase with a debit and if we perform the services that means we have service revenue.
01:31
We've completed our service so i can record revenue.
01:38
Purchase equipment on account, what we got was equipment.
01:42
And equipment is an asset, and assets increase with debits.
01:47
We didn't pay cash, we have accounts payable for 2000 because we owe this amount...