Below is a series of typical accounting transactions and their affect on the appropriate General Ledger accounts and financial statements.
Simple Accounting Examples
There is an initial $5,000 cash investment by the owner.
1.) You buy a new computer and pay $1,299 cash
2.) You buy two new printers for $1,000 with your company credit card
3.) You buy 100 lbs of coffee for inventory at $15 each for $1,500 and pay on COD
4.) You sell 40 lbs of coffee from inventory at $25 each for $1,000 on Net 30 terms, an inventory value of $600
5.) You pay your monthly rent of $800
6.) You pay half your credit card bill for your new printers
7.) Your customer pays $1,000 for the coffee they previously purchased on Terms
8.) You sell 50 lbs of coffee at $35 each for $1,750 cash, an inventory value of $750
9.) You buy 10 lbs of coffee for inventory at $15 each for $150 total and pay on COD
10.) You sell 3 lbs of coffee at $35 each for $105 and take a $50 deposit
Now let’s add some additional entries to the mix that include more ‘advanced’ accounting, like accounts receivable and payable, depreciation, inventory, and payroll.
Advanced Accounting Examples
Remember, there is a $5,000 initial investment by the owner.
11.) You buy office furniture and receive Net 30 Day terms for $1,900
12.) You buy a new Server and 3 workstations, receive Net 60 Day terms, total investment – $7,500
13.) You record your first month’s depreciation on your new hardware of $208, $7,500 over 36 months
14.) You buy 1,000 lbs of coffee for inventory at $15 each for $15,000, and receive a 2% discount if paid within 10 days, Net 30 terms
15.) You ship an order for 400 lbs of coffee at $30 each for $12,000 and get a 50% deposit for $6,000, plus you collect 6% sales tax for $720
16.) You pay your next month’s rent of $800
17.) You pay your employee (salary of $1,000, less; $150 in Federal taxes, $77 in FICA and Medicare, $70 in State and Local taxes)
18.) You make your 941 deposit (Federal and FICA/Medicare) at your bank
19.) You sell 500 lbs of coffee at $32 each for $16,000 on COD, an inventory value of $7,500
20.) You pay for the 1,000 lbs of coffee you had Net 30 terms on and take the 2% discount
