Journal Entries for Record to Report (R2R)

Journal Entry Examples

Entity A had the following transactions in December 2xx1:

1. December 2, Owner P created a new Entity B and invested $140,000 in cash.

2. December 9, Entity B borrowed $80,000 from a bank.

3. December 11, Entity B purchased 3,000 units of merchandise at $10 per unit in cash.

4. December 18, Entity B purchased equipment and paid $70,000 in cash.

1. Investment by owner

December 2, Owner P created a new Entity B and invested $140,000 in cash.

	Debit	Credit
Cash	140,000
Owner's equity		140,000

[Note]

Debit: Increase in cash (asset)

Credit: Increase in owner's equity (equity)

2. Borrowings from a bank

December 9, Entity B borrowed $80,000 from a bank.

	Debit	Credit
Cash	80,000
Borrowings		80,000

[Note]

Debit: Increase in cash (asset)

Credit: Increase in borrowings (liability)

3. Purchase of merchandise in cash

December 11, Entity B purchased 3,000 units of merchandise at $10 per unit in cash.

	Debit	Credit
Merchandise	30,000
Cash		30,000

[Note]

Debit: Increase in merchandise (asset)

Credit: Decrease in cash (asset)

4. Purchase of equipment in cash

December 18, Entity B purchased equipment and paid $70,000 in cash.

	Debit	Credit
Equipment	70,000
Cash		70,000

[Note]

Debit: Increase in equipment (asset)

Credit: Decrease in cash (asset)

Comments

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