Let's begin. We are given the following preliminary balance sheet, which reports the account balances prior to any adjusting entries:
|Preliminary Balance Sheet - courtesy AccountingCoach.com|
- login to LearnDoubleEntry.org
- go to the Bookkeeping and Accountancy page
- click on "Fork an existing firm" menu item
- click on "Standard Firm"
- choose to duplicate the Chart of Accounts
- click on the "Yes, fork this firm" button
- set a name and a description for the firm
- click on the "Save" button, and you are done.
Instead of writing the single lines here, you can:
1. switch to raw input mode
2. load all accounts from the chart of accounts
3. copy the account names to a spreadsheet (first select the whole text of the box, then copy, then paste on the spreadsheet)
4. find the accounts in the spreadsheet, and write the amounts of debits and credits (if you don't find an account with exactly the same name, choose a one that has the same meaning and don't worry: you can edit the name later; but if you really don't find an account, just add a line with the missing name with an exclamation mark at the end, like we did here for Prepaid insurance); pay attention to the fact that the totals of debits and credits must balance; you can, if you want, delete the lines of unused accounts
5. copy the selection from the spreadsheet back to the web form, and click on the "Switch to text fields mode" icon
6. since you probably want the accounts with the debits first, just click on the "Sort postings, debits first" icon
7. save the journal entry, and you are done. Easier done than said, isn't it?If you look at the journal now, it looks ok. We used Supplies Inventory instead of Supplies, Bank Checking Account instead of Cash, Bills Payable instead of Notes Payable, Payments on Account from Customers instead of Unearned Revenues, Employment Expenses Payable instead of Wages Payable, and Common Stock instead of Mary Smith, Capital.
If this is fine for you, well. Otherwise, you can edit the Chart of Accounts with the names that you prefer. The Trial Balance looks like this now:
As you can see, the Prepaid Insurance account has been added on the fly, and you find it marked in yellow at the bottom of the table. To fix the problem, you just have to assign a correct code to the account. Since you already have a Prepaid Expenses account, you can choose to add another account as its sibling with a code like 00.03.06.03. This way, the account will be a child of the Accrued Income and Prepaid Expenses account, which has code 00.03.06.
Other choices would be possible. For instance, you can make Prepaid Insurance a child of Prepaid Expense, by entering a code like 00.03.06.02.01. This way, Prepaid Expense would not be usable as such, because it would have some children.
It's up to you how to organize your Chart of Accounts, and which names to give to the accounts themselves. Just consider that:
- once you edited the Chart of Accounts of one firm, you can use it in other firms that are forked from it;
- if you spot any problem in the Chart of Accounts provided for the system-provided Standard Firm, you can add a comment in this blog or drop us a message, and we'll try to fix it.
Edit the account names as you like. We only changed Common Stock to Mary Smith, Capital.
When you are done, you can start entering the journal entries of the example exercise provided by AccountingCoach.com. (We added an extra journal entry with some amounts for Income Statement accounts at the beginning.)
For each journal entry, you can click on the "Analyze the Transaction" icon, that shows a little explanation of what is going on. For instance, when you make the adjusting entry about bad debts valutation, you can see that you have an increase in Expense (Bad Debt Expense) and an increase in an Asset Contra Account (Allowance for Doubtful Debts).
When you want, you can have a look at the T-Account (called Ledger in the application) of any account. It's not actually T-shaped, but the meaning should be obvious anyway.
public page, and you can fork the firm by using the slug "sample-exercise-03".
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