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• At the end of the accounting period, these items would be consolidated and posted into one line item in the general ledger.
• There are two parts in the ledger the debit part and the credit part.
• Credit BalanceCredit Balance is the capital amount that a company owes to its customers & it is reflected on the right side of the General Ledger Account.
• If separable, then land account different and building account separate, and so on.
• The difference between the debit and credit totals is $24,800 (32,300 – 7,500).

Printing Plus provided the service, thus earning revenue. Service Revenue would increase on the credit side. Cash was used to pay for salaries, which decreases the Cash account. Cash is decreasing because it was used to pay for the outstanding liability created on January 5.

Accounting and the Importance of Adjusting Entries

You paid, which means you gave cash so you have less cash. To decrease the total cash, credit the account because asset accounts retail accounting are reduced by recording credit entries. A summary showing the T-accounts for Printing Plus is presented in Figure 3.10.

This is posted to the Equipment T-account on the debit side. This is posted to the Accounts Payable T-account on the credit side. In the journal entry, Cash has a debit of $20,000. This is posted to the Cash T-account on the debit side .

Legal Definition

Whereas the balance sheet counts account receivable, bonds payable, retained earnings, cash, accounts payable, accumulated depreciation, and common stock. Therefore, it becomes necessary for the accountant to segregate the account category. A three-step process will be used to demonstrate how to record each transaction and post it to the ledger.