Anyone here good at accounting? I can't figure out this assignment...

Let me ask my accounting-teacher hubby....hold on...

 

For your trail balance (which is a list/summation of all accounts assets, liabilities, owners equity, income and expenses)all debit balance accounts are in the left column and credit balance accounts are in the right column.
Debit balance accounts are Purchases, Freight In, Sales discounts, Inventory, Administrative Expenses, Cash, Inventory

Credit Balance accounts are Purchase Returns, Sales, Purchase Discounts, Owners Equity

The total of the debit balances have to equal the credit balances.

For your Balance Sheet
Your Asset or debit balance or left column accounts are Cash, and Inventory. The Liabilities or credit balance or right column accounts are Owners Equity. Remember Assets equals Liabilities + Owners Equity. For your Balance Sheet for X1: Assets of Cash 10K + Inventory 20K equals Liabilities 0 + Owners Equity 30k.


Net Sales Revenue is Sales less Sales Returns.

Cost of goods Sold is Beginning Inventory + Purchases + Freight In - Purchase Returns - Purchase Discounts - Ending Inventory.

Gross profit is Net Sales Revenue - COGS

Net Income is Net Sales Revenue - COGS - Administrative Expense

Hope this helps

 

No Expenses are Debit balance accounts.

Think of it this way: You sell a widget for $100 for Cash. the entry would be
Debit Cash 100
Credit Sales 100

Pay an employee $60
Debit Payroll Expense 60
Credit Cash 60

Cash and expenses are debit balance accounts, although Cash is a balance sheet account and Payroll Expense is an income statement account.

Debits increase debit accounts and decrease credit accounts
Credits increase credit accounts and decrease debit accounts


Sales an income account is a credit balance, so an increase in sales increases income and ultimately Owners Equity.

Payroll an expense account is a debit balance, so an increase in Payroll decreases income and ultimately Owners Equity.

 

Oh good...someone else is helping...hubby has had about 8 beers too many (friend is over) and he's no help right now! LOL

 

Sorry I am not doing a good job explaining this.


Assets and Expenses are debit accounts and Income, Liabilities and Owners Equity are credit accounts.

In a trail balance sheet which is a different statement from the Balance Sheet, the sum of all debit accounts are added together and all credit balance accounts are added together. the sum of these two columns should equal total debits equal total credits. Remember you are using a dual entry system. Every entry has a debit and a credit. The trail balance is just checking that the debits equal the credits.

For the Balance Sheet and Income statement the accounts from the trail balance are seperated into two the two different statements.

On a balance sheet only the asset, liability and Owners equity accounts are used.

On the income statement only the income and expense accounts are used.

The balance sheet is a snapshot of the finances of the company at a point in time. The income statement is the movie which explains how the the company got from the snapshot taken at the end of one year to the snapshot taken at the end of the next year.

In response to your question why add it in the first place when it gets subtracted. To get net income you add all your income together and add all your expenses together, then you subtract your expenses from your income to get net income. At the end of the year all income and expense accounts are reset to zero and the difference between total income and total expenses or net income is added to owners equity.

I would love to help some more but I need to get some sleep. I hope this helps. I will check this thread tomorrow should you have any other questions.

Accounting is not hard, once you have the "light on" moment.

One final thought for the night.

Part of the problem for begining accounting students to understand debits and credits is the because most people are using debit and credits backwards due to their banking accounts. On your personal financial statement (PFS) your checking account is an asset account or a debit balance account. So a debit on your PFS would increase this account and a credit would decrease this account.

For the bank, your account is a liability account. They owe you the money you have on deposit. When you deposit your paycheck into your bank account your entry on your personal financial statement would be to debit your checking account an asset account to you ( remember debits increase debit balance accounts) and credit your income or earnings account (credits increase credit balance accounts). The bank will debit an asset account and credit your checking account which is a liability account to them.

Hope this did not confuse you more.