Journalizing a Business Transaction – Example
On Jan 9th, 'X' business sold one computer on credit to Rex Company for $500(Memorandum 3).
Step 1: Analysis:
The accounts affected in the transaction are:
- Accounts Receivable: Rex-Co.
- Office Equipment
- Both accounts are Asset accounts
- Accounts Receivable: Rex-Co increases by $500
- Office Equipment decreases by $500
Step 2: Debit – Credit Rule:
- Increase in the Asset account is recorded as debit. Debit the Accounts Receivable Rex-Co Account for $500.
- Decrease in the Asset account is recorded as a credit. Credit Office Equipment for $500.
Step 3: Prepare a T Account:
Step 4: Pass a Journal Entry:
Date |
Account Title |
Debit |
Credit |
Jan 9 |
Accounts Receivable: Rex-Co |
$500 |
|
|
Office Equipment |
|
$500 |
|
Memorandum No. 3 |
|
|