Posting Transactions Each business transaction always results in pairs of accounting transactions, a credit and a debit. In the case of a sale of a product or service, a single business transaction results in two pairs of accounting transactions. One pair is related to the Revenues and the other pair is related to the Cost of Revenues. Each of the accounting transactions are posted to one of the above accounts. Therefore each business transaction will result in multiple accounts being updated. Remember, the double entry of a pair of accounting transactions is what make the financial statements balance. The following tutorial exercise (not graded) is designed to prepare you to complete the required (graded) exercise below. Wrong answers on this tutorial exercise will turn red. The graded exercise will not be forgiving. You most post the accounting transactions related to a series of business transactions. In this part of the exercise you will be operating as the Comptroller of the company, preparing the accounting statements Post the business's transactions by entering either a positive or negative value in the appropriate yellow cells. In this exercise you purchase machines for $500 and resell them for $1000. Business Transactions Prepay $500 for rental of store Receive store rental invoice Purchase 5 machines on credit Sell 3 machines on credit Pay owners salary of $1000/month Pay $2500 invoice for 5 machines purchased Receive cash payment for sale on credit Sell 2 machines for cash Accounting Transactions Revenues Income Statement Cost of Revenues SG&A Net Income Cash Accounts Receivable $ $ $ When you have successfully completed the above exercise (no cells highlighted in red) you will notice in columns P through R that the Change in Assets = Change in Liabilities + Change in Equity. This is because Assets Liabilities + Equity. Understanding this fundamental accounting relationship will help you in completing the more complex graded exercise below. Balance Sheet Inventory Prepaid Rent Accounts Payable Change in Change in + Change in Assets = Liabilities Equity $ SSSSSSS es $ $ $ $ $ $ SSSSS $ $ $ $ $ $ $ $ $ $ $