Credit what the business parts with or the account that yields the benefit. Model entries for purchases and sales, together with a memorandum for beginning the business will now be shown in the journal. Milwaukee, Wis., Nov. 1, 19~ S. Custer has this day begun the General Produce business, investing cash. 2000 PAGE 1 1 will now be applied to the journal entries. FIRST ENTRY. Merchandise is debited because it is received. J. C. Braden's account is credited because he yields the benefit of the exchange, that is, gives to the business merchandise and receives nothing in return except an implied promise to pay him at some future time. The items purchased need not be recorded because when a business buys goods it will receive an invoice with the items listed. The invoice is kept for reference in some convenient file. SECOND ENTRY. C. D. Hawks' account is debited because he receives the benefit of the exchange and gives the business nothing in return except an implied promise to pay. Merchandise is credited because it is parted with. The items sold. must be recorded as the business gives out the invoice to the customer and must have a record of what was sold, in permanent form. THIRD ENTRY. This entry is similar to the first. FOURTH ENTRY. This entry is similar to the second. The explana- tion of the sale requires three lines. on the same line with the debit account and the credit amount on the same line with the credit account. POSTING Posting is transferring the debits and credits from the books of entry under the proper headings in the ledger. The second part is a credit to J. C. Braden's account, as follows: SECOND ENTRY. as follows: The first part is a debit to C. D. Hawks' account, C.D. Nawks The second part is a credit to Merchandise. The Merchandise account would then appear as follows: The The other journal entries should be posted in the same way. page in the folio column to the left of the names of the accounts in the journal shows how much of the journal has been posted. A cash book containing receipts and payments on account, proprietor's investment and withdrawals, as well as purchases and sales of merchandise for cash, and payments for carrying on the business will now be shown. (See illustrations below.) ANALYSIS OF CASH BOOK ENTRIES Cash Receipts. FIRST ENTRY. Cash is understood to be debited because it is received. C. E. Brooks' account is credited because he yields the benefit to the business by investing cash. SECOND ENTRY. Cash is understood to be debited because it is received. Merchandise is credited because it is parted with. THIRD ENTRY. Cash is understood to be debited because it is received. Every entry on the Receipts side is a debit to Cash because it is received. C. D. Braun's account is credited because he yields a benefit to the business by paying on account. FOURTH ENTRY. Same as second. FIFTH ENTRY. S. G. Garner's account is credited because he yields a benefit to the business by paying all of his account. Cash Payments Jan. 19 L. F. ACCOUNT TO BE DEBITED Jan. 2 2 Expense Rent to "/ 4 2 Mdse. 8 میرا 20 Inv. of L. E. Styles 367 45 Expense Office books 1125 100 J. E. Gardner Inv. of the 10th 175 80 25 C. E. Brooks Personal use 31 50 Expense Clerk's salary 3.5. 31 1 Cash Cr. Total PAGE 3 769.50 219675 Cash Payments. FIRST ENTRY. Expense is debited because the business receives the benefit of the use of the store room. Cash is understood to be credited because it is parted with. SECOND ENTRY. Merchandise is debited because it is received. Cash is understood to be credited because it is parted with. Each entry on the Payments side is a credit to cash. THIRD ENTRY. Expense is debited because the business receives the office books for use in carrying on the business. FOURTH ENTRY. H. A. Ewing's account is debited because he received the benefit of the payment. FIFTH ENTRY. J. E. Gardner's account is debited because he received the benefit of the payment to him of the invoice bought on the 10th. SIXTH ENTRY. C. E. Brooks' account is debited because he received the benefit of the money withdrawn for personal use. SEVENTH ENTRY. Expense is debited because the business received the benefit of the clerk's services. Credit each other account for the amount specified, and put the page of the ledger in the folio column of the cash book to the left of the name of the account. Since each entry is understood to be a debit of cash, our double |