We introduce here some simple examples of business transaction and how they are recorded using LearnDoubleEntry.org's bookkeeping system. This is just a sort of "proof of concept", and we'll use it also as a way to show some screenshots in the right context. Other exercises, probably more complex than this one, can be prepared, and other firms can be shared.
Joanna sets up an individual business (she will repair children toys). She opens a bank account for her firm, with a first $3,000 deposit.
Here's how the journal entry would like:
Joanna needs some cash to buy some tools she'll need. She goes to the bank and withdraws $200 from her bank account. Afterwards, she goes to a hardware shop to buy the tools, paying them $155.
There are going to be other two journal entries. If you look at the journal now, you would find something like:
If you want to see which accounts have been debited and credited so far, you can have a look at the trial balance:
Joanna repairs a wooden horse. The amount to receive for the job done is $140, but she agrees with Tom, the owner of the horse, to be paid half in cash now and half by a bank transfer after a week.
When Joanna records the income, she enters a debit of the Cash account for $70, and a debit of a new "Tom" account, that will be put under "Accounts receivable" in the Charts of Accounts (this can be done later).
The account "Services Provided" will be credited for the total amount, $140.
Joanna deposits in her bank account all the cash she has.
Let's now check the ledger of the Cash account. We will see all the transactions concerning it.
Joanna receives the payment for the wooden horse repair from Tom.
Joanna pays an insurance premium of $80 with a bank transfer, for which she is debited $1 from the bank.
The fiscal year / reporting period is not finished yet, but we can have a look at the balance sheet and at the income statement so far.
You may notice that the grandtotal for Assets is $59 greater than the one for Liabilities and Equity. And $59 is exactly the Operating Profit so far.
If we were to prepare the final statements now, without any other transaction, we would need a closing post for all temporary (economic) accounts, and we would get this new Liabilities and Equity section of the Financial Statement.
You can have a look at the Journal and at the Statements on the public page of Sample Exercise 01.
You can login and fork the firm by using the slug «sample-exercise-01».