Using the beginning balance sheet, I have to record all of the transactions. I do not have to use debits or credits, just positive or negative to an account. For example, if the company purchased equipment on credit, you would increase the equipment account and increase the A/P accounts. Later, when you pay off the A/P balance, you would decrease cash and A/P by putting negative numbers in those accounts.

3 ASSETS Indiana Jones, Inc. 2 Summary of Account Balances 1/1/2005 (Beginning Balances) 4 Accounts Balances 5 Cash 130,000 6 Short-term Investments 7 Accounts Receivable 25,000 8 Allowance for Doubtful Accounts (8,000) 9 Interest Receivable 10 Office Supplies 1,200 11 Merchandise Inventory 30,000 12 Prepaid Insurance 15,000 13 Land 50,000 14 Building 300,000 15 Accumulated Depreciation -- Building (60,000) 16 Equipment 600,000 17 Accumulated Depreciation -- Equipment (100,000) 18 Intangible Asset -- Patent 30,000 19 Accounts Payable 50,000 20 Salaries Payable 12,000 21 Income Taxes Payable 12,000 22 Unearned Revenue 30,000 23 Dividends Payable 15,000 24 Interest Payable 22,000 25 Notes Payable 370,000 26 Common Stock 100,000 27 Additional Paid-in Capital 230,000 28 Retained Earnings 172,200 29 Sales Revenue 30 Sales Discounts 31 Sales Allowances 32 Service Revenue 33 Interest Income 34 Cost of Goods Sold 35 Advertising Expense 36 Office Supplies Expense 37 Salaries Expense 38 Utilities Expense 39 Insurance Expense 40 Bad Debt Expense 41 Depreciation Expense 42 Amortization Expense 43 Miscellaneous Expense 44 Interest Expense 45 Income Tax Expense 46 Totals 47 48 Correct LIABILITIES EQUIT REVENUES EXPENSES If the accounting equation is in balance, you will see the word "Correct", if not then you will find 12 2 Date Description 1/1 BEGINNING BALANCES 1/8 Indiana pays off the beginning salaries payable balance 1/12 Indiana buys 1,000 units of inventory at a per unit cost of $16 on account, terms net/60. 1/19 Indiana pays off the beginning income taxes payable balance. 1/21 Indiana sells 1,100 units to Sallah Co. for $85 each on credit, terms 2/15, net/45. 1/31 Indiana pays off $30,000 of the beginning accounts payable balance. 2/7 Indiana pays for $4,000 of magazine advertising 2/15 Indiana writes off the A/R balance owed by Short Round Co. as uncollectible (see instructions) 2/18 Indiana collects the amount owed by Sallah Co. outside of the discount period. 2/27 Indiana pays $18,000 of the interest payable balance. 3/4 Indiana pays off the 1/12 purchase. 3/8 Indiana sells 500 units to Ravenwood LLC for $85 each on credit, terms 2/15, net/45 3/14 Indiana collects the amount owed by Ravenwood LLC within the discount period. 3/24 Indiana buys 1,200 units of inventory at a per unit cost of $18 on account, terms net/60. 4/1 Indiana provides the services owed to a client. The client paid Indiana $30,000 last year. 4/8 Indiana pays off the beginning dividends payable balance. 4/12 Indiana pays off the 3/24 purchase. 4/25 Indiana sells 800 units to Mola Ram, Inc. for $90 each on credit, terms 2/15, net/45. 5/1 Indiana grants Mola Ram, Inc. an allowance of $4,000 for damaged goods from the 4/25 sale. 5/8 Indiana collects the amount owed by Mola Ram, Inc. within the discount period. 5/15 Indiana pays Toht, Dietrich, and Gobler GmbH for miscellaneous expenses for $10,000. 5/27 Indiana buys 1,500 units of inventory at a per unit cost of $20 on account, terms net/60. 6/3 Indiana collects the amount owed by Barranca Inc. (see instructions). No discount applies. 6/27 Indiana pays for $6,000 of magazine advertising 7/3 Indiana pays off the 5/27 purchase. 7/10 Indiana sells 1,600 units to Elsa Schneider Co. for $92 each on credit, terms 2/15, net/45. 7/17 Indiana buys office supplies for $5,000 on credit, terms net/45. 7/27 Indiana pays off the 7/17 purchase. 8/9 Indiana collects the amount owed by Elsa Schneider Co. outside the discount period. 8/24 Indiana pays off $20,000 of the beginning accounts payable balance. 8/27 Indiana buys 900 units of inventory at a per unit cost fo $23 on account, terms net/60. 9/1 Indiana sells 500 units to Pankot Construction for $92 each in cash. 9/12 Indiana pays of the 8/27 purchase. 9/30 Indiana buys a short-term investment for $50,000. 10/4 Indiana sells 750 units to Maharajah Singh Co. for $93 each on credit, terms 2/15, net 45 38 10/15 Indiana collects the amount owed by Maharajah Singh Co. within the discount period. 39 10/31 Indiana receives $12,000 in advance for services to be provided next year. 40 11/9 Indiana buys 1,000 units of inventory at a per unit cost of $25 on account, terms net/60. 41 11/19 Indiana buys office supplies for $4,000 in cash. 42 11/27 Indiana pays for postage, shipping costs, and other miscellaneous items (total of $3,000). 43 12/4 Indiana pays off the 11/9 purchase. 44 12/12 Indiana buys 600 units of inventory at a per unit cost of $26 on account, terms net/60 45 12/16 Indiana sells 1,000 units to Kazim & Brothers Co. for $95 each on credit, terms 2/15, net/45. 46 12/29 Indiana sells $80,000 of services to Belloq LLC on credit, terms 2/15, net/45 30 36 3 ASSETS Indiana Jones, Inc. 2 Summary of Account Balances 1/1/2005 (Beginning Balances) 4 Accounts Balances 5 Cash 130,000 6 Short-term Investments 7 Accounts Receivable 25,000 8 Allowance for Doubtful Accounts (8,000) 9 Interest Receivable 10 Office Supplies 1,200 11 Merchandise Inventory 30,000 12 Prepaid Insurance 15,000 13 Land 50,000 14 Building 300,000 15 Accumulated Depreciation -- Building (60,000) 16 Equipment 600,000 17 Accumulated Depreciation -- Equipment (100,000) 18 Intangible Asset -- Patent 30,000 19 Accounts Payable 50,000 20 Salaries Payable 12,000 21 Income Taxes Payable 12,000 22 Unearned Revenue 30,000 23 Dividends Payable 15,000 24 Interest Payable 22,000 25 Notes Payable 370,000 26 Common Stock 100,000 27 Additional Paid-in Capital 230,000 28 Retained Earnings 172,200 29 Sales Revenue 30 Sales Discounts 31 Sales Allowances 32 Service Revenue 33 Interest Income 34 Cost of Goods Sold 35 Advertising Expense 36 Office Supplies Expense 37 Salaries Expense 38 Utilities Expense 39 Insurance Expense 40 Bad Debt Expense 41 Depreciation Expense 42 Amortization Expense 43 Miscellaneous Expense 44 Interest Expense 45 Income Tax Expense 46 Totals 47 48 Correct LIABILITIES EQUIT REVENUES EXPENSES If the accounting equation is in balance, you will see the word "Correct", if not then you will find 12 2 Date Description 1/1 BEGINNING BALANCES 1/8 Indiana pays off the beginning salaries payable balance 1/12 Indiana buys 1,000 units of inventory at a per unit cost of $16 on account, terms net/60. 1/19 Indiana pays off the beginning income taxes payable balance. 1/21 Indiana sells 1,100 units to Sallah Co. for $85 each on credit, terms 2/15, net/45. 1/31 Indiana pays off $30,000 of the beginning accounts payable balance. 2/7 Indiana pays for $4,000 of magazine advertising 2/15 Indiana writes off the A/R balance owed by Short Round Co. as uncollectible (see instructions) 2/18 Indiana collects the amount owed by Sallah Co. outside of the discount period. 2/27 Indiana pays $18,000 of the interest payable balance. 3/4 Indiana pays off the 1/12 purchase. 3/8 Indiana sells 500 units to Ravenwood LLC for $85 each on credit, terms 2/15, net/45 3/14 Indiana collects the amount owed by Ravenwood LLC within the discount period. 3/24 Indiana buys 1,200 units of inventory at a per unit cost of $18 on account, terms net/60. 4/1 Indiana provides the services owed to a client. The client paid Indiana $30,000 last year. 4/8 Indiana pays off the beginning dividends payable balance. 4/12 Indiana pays off the 3/24 purchase. 4/25 Indiana sells 800 units to Mola Ram, Inc. for $90 each on credit, terms 2/15, net/45. 5/1 Indiana grants Mola Ram, Inc. an allowance of $4,000 for damaged goods from the 4/25 sale. 5/8 Indiana collects the amount owed by Mola Ram, Inc. within the discount period. 5/15 Indiana pays Toht, Dietrich, and Gobler GmbH for miscellaneous expenses for $10,000. 5/27 Indiana buys 1,500 units of inventory at a per unit cost of $20 on account, terms net/60. 6/3 Indiana collects the amount owed by Barranca Inc. (see instructions). No discount applies. 6/27 Indiana pays for $6,000 of magazine advertising 7/3 Indiana pays off the 5/27 purchase. 7/10 Indiana sells 1,600 units to Elsa Schneider Co. for $92 each on credit, terms 2/15, net/45. 7/17 Indiana buys office supplies for $5,000 on credit, terms net/45. 7/27 Indiana pays off the 7/17 purchase. 8/9 Indiana collects the amount owed by Elsa Schneider Co. outside the discount period. 8/24 Indiana pays off $20,000 of the beginning accounts payable balance. 8/27 Indiana buys 900 units of inventory at a per unit cost fo $23 on account, terms net/60. 9/1 Indiana sells 500 units to Pankot Construction for $92 each in cash. 9/12 Indiana pays of the 8/27 purchase. 9/30 Indiana buys a short-term investment for $50,000. 10/4 Indiana sells 750 units to Maharajah Singh Co. for $93 each on credit, terms 2/15, net 45 38 10/15 Indiana collects the amount owed by Maharajah Singh Co. within the discount period. 39 10/31 Indiana receives $12,000 in advance for services to be provided next year. 40 11/9 Indiana buys 1,000 units of inventory at a per unit cost of $25 on account, terms net/60. 41 11/19 Indiana buys office supplies for $4,000 in cash. 42 11/27 Indiana pays for postage, shipping costs, and other miscellaneous items (total of $3,000). 43 12/4 Indiana pays off the 11/9 purchase. 44 12/12 Indiana buys 600 units of inventory at a per unit cost of $26 on account, terms net/60 45 12/16 Indiana sells 1,000 units to Kazim & Brothers Co. for $95 each on credit, terms 2/15, net/45. 46 12/29 Indiana sells $80,000 of services to Belloq LLC on credit, terms 2/15, net/45 30 36