Journaldrill / Cheat sheet
Journal entries cheat sheet
Every entry written the way you would post it: debit first, credit indented, with the rule behind it. Eighty entries in nine groups, most with a drill where you post it yourself and the checker tells you what is off. Print the page or get the PDF by email.
The ones worth learning first
| What | How |
|---|
| Debits and credits by account type | Assets, Expenses, Dividends increase with a DEBIT. Liabilities, Equity, Revenue increase with a CREDIT. (DEAD CLER) |
| Every entry balances | Total debits = total credits, always. |
| Cash sale | Dr Cash / Cr Service Revenue |
| Sale on account | Dr Accounts Receivable / Cr Sales Revenue; Dr COGS / Cr Inventory |
| Pay an expense | Dr Rent Expense / Cr Cash |
| Buy on account | Dr Inventory (or Supplies) / Cr Accounts Payable |
| Prepaid used up | Dr Insurance Expense / Cr Prepaid Insurance |
| Accrue an expense | Dr Wages Expense / Cr Wages Payable |
| Depreciation | Dr Depreciation Expense / Cr Accumulated Depreciation |
| Close revenue | Dr Service Revenue / Cr Income Summary (or Retained Earnings) |
Everyday transactions
| Owner invests cash | Dr Cash / Cr Owner's Capital (Common Stock for a corporation) drill |
| Buy equipment, part cash part credit | Dr Equipment / Cr Cash, Cr Notes Payable (or Accounts Payable) drill |
| Cash sale of services | Dr Cash / Cr Service Revenue drill |
| Services billed on account | Dr Accounts Receivable / Cr Service Revenue drill |
| Pay rent and utilities | Dr Rent Expense, Dr Utilities Expense / Cr Cash drill |
| Pay a supplierNo expense: the expense was recorded when the bill was received. | Dr Accounts Payable / Cr Cash drill |
| Collect a receivableNo revenue: the revenue was recorded at the sale. | Dr Cash / Cr Accounts Receivable drill |
| Owner withdrawal | Dr Owner's Drawings / Cr Cash drill |
| Dividends declared and paid | Dr Dividends (or Retained Earnings) / Cr Cash drill |
| Customer pays in advance | Dr Cash / Cr Unearned Revenue |
| Buy supplies for cash | Dr Supplies / Cr Cash |
| Receive a utility bill, pay later | Dr Utilities Expense / Cr Accounts Payable |
Adjusting entries
| Prepaid insurance usedAmount = months used / months paid x premium. | Dr Insurance Expense / Cr Prepaid Insurance drill |
| Prepaid rent used | Dr Rent Expense / Cr Prepaid Rent drill |
| Supplies usedAmount = beginning + bought - count on hand. | Dr Supplies Expense / Cr Supplies drill |
| Unearned revenue earned | Dr Unearned Revenue / Cr Service Revenue drill |
| Accrued wages | Dr Wages Expense / Cr Wages Payable drill |
| Accrued interest on a note payablePrincipal x rate x months/12. | Dr Interest Expense / Cr Interest Payable drill |
| Accrued revenue | Dr Accounts Receivable / Cr Service Revenue drill |
| Depreciation(Cost - salvage) / useful life per year. | Dr Depreciation Expense / Cr Accumulated Depreciation drill |
| Accrued interest on a note receivable | Dr Interest Receivable / Cr Interest Revenue |
| Bad debt estimate | Dr Bad Debt Expense / Cr Allowance for Doubtful Accounts drill |
Closing entries
| Close revenues | Dr Service Revenue / Cr Income Summary drill |
| Close expenses | Dr Income Summary / Cr each Expense |
| Close Income Summary (profit) | Dr Income Summary / Cr Retained Earnings (or Owner's Capital) |
| Close Income Summary (loss) | Dr Retained Earnings / Cr Income Summary |
| Close dividends or drawings | Dr Retained Earnings / Cr Dividends |
| What gets closed | Revenues, expenses, dividends/drawings. Never assets, liabilities, or capital. |
Merchandise (perpetual inventory)
| Buy inventory on account | Dr Inventory / Cr Accounts Payable drill |
| Freight-in (FOB shipping point)Freight on sales (FOB destination) is Delivery Expense. | Dr Inventory / Cr Cash drill |
| Purchase return | Dr Accounts Payable / Cr Inventory drill |
| Purchase discount taken (2/10, n/30) | Dr Accounts Payable (full) / Cr Cash (98%), Cr Inventory (2%) drill |
| Sale on account, with cost | Dr Accounts Receivable / Cr Sales Revenue; Dr Cost of Goods Sold / Cr Inventory drill |
| Sales return, goods restocked | Dr Sales Returns and Allowances / Cr Accounts Receivable; Dr Inventory / Cr COGS drill |
| Sales discount taken | Dr Cash (98%), Dr Sales Discounts (2%) / Cr Accounts Receivable (full) drill |
| Inventory write-down (LCNRV) | Dr Cost of Goods Sold (or Loss) / Cr Inventory drill |
| Shrinkage after a count | Dr Cost of Goods Sold / Cr Inventory drill |
| Periodic system: purchase | Dr Purchases / Cr Accounts Payable; COGS computed at period end |
Receivables and notes
| Bad debts, percent of salesAmount = credit sales x rate, regardless of the allowance balance. | Dr Bad Debt Expense / Cr Allowance for Doubtful Accounts drill |
| Bad debts, aging methodAmount = required ending allowance - existing credit balance (+ existing debit balance). | Dr Bad Debt Expense / Cr Allowance drill |
| Write off an accountNo expense at write-off under the allowance method. | Dr Allowance for Doubtful Accounts / Cr Accounts Receivable drill |
| Recovery of a written-off account | Dr Accounts Receivable / Cr Allowance; then Dr Cash / Cr Accounts Receivable drill |
| Borrow with a note | Dr Cash / Cr Notes Payable drill |
| Pay a note at maturity | Dr Notes Payable, Dr Interest Expense (or Interest Payable) / Cr Cash drill |
| Accept a customer's note | Dr Notes Receivable / Cr Accounts Receivable drill |
| Collect a note with interest | Dr Cash / Cr Notes Receivable, Cr Interest Revenue |
| Credit card sale with a fee | Dr Cash (net), Dr Credit Card Expense / Cr Sales Revenue drill |
| Replenish petty cash | Dr the expenses, Dr/Cr Cash Over and Short / Cr Cash drill |
| Dishonored note | Dr Accounts Receivable / Cr Notes Receivable, Cr Interest Revenue |
Payroll and fixed assets
| Record payroll | Dr Salaries Expense (gross) / Cr FICA Payable, Cr Income Tax Withheld Payable, Cr Salaries Payable (net) drill |
| Employer payroll taxes | Dr Payroll Tax Expense / Cr FICA Payable, Cr FUTA Payable, Cr SUTA Payable drill |
| Pay the net wages | Dr Salaries Payable / Cr Cash |
| Buy a fixed asset with installation | Dr Equipment (price + freight + installation) / Cr Cash |
| Sell equipment at a gainUpdate depreciation to the sale date first. | Dr Cash, Dr Accumulated Depreciation / Cr Equipment, Cr Gain on Sale drill |
| Sell equipment at a loss | Dr Cash, Dr Accumulated Depreciation, Dr Loss on Sale / Cr Equipment drill |
| Scrap a fully depreciated asset | Dr Accumulated Depreciation / Cr Equipment |
| Capital improvement | Dr Equipment / Cr Cash (repairs are Dr Repairs Expense) |
| Amortize an intangible | Dr Amortization Expense / Cr Patent (or Accumulated Amortization) |
Equity
| Issue common stock above par | Dr Cash / Cr Common Stock (par), Cr Paid-in Capital in Excess of Par drill |
| Issue preferred stock | Dr Cash / Cr Preferred Stock, Cr Paid-in Capital in Excess of Par, Preferred drill |
| Buy treasury stock | Dr Treasury Stock / Cr Cash drill |
| Reissue treasury stock above cost | Dr Cash / Cr Treasury Stock (cost), Cr Paid-in Capital from Treasury Stock |
| Declare a cash dividend | Dr Dividends (or Retained Earnings) / Cr Dividends Payable drill |
| Pay the dividend | Dr Dividends Payable / Cr Cash |
| Small stock dividend (under 20-25%) | Dr Retained Earnings (market value) / Cr Common Stock Dividend Distributable (par), Cr Paid-in Capital in Excess of Par drill |
| Large stock dividend | Dr Retained Earnings (par value) / Cr Common Stock Dividend Distributable |
| Stock split | No entry; memo note of the new share count and par. |
Bonds and leases
| Bonds issued at par | Dr Cash / Cr Bonds Payable drill |
| Bonds issued at a discount | Dr Cash, Dr Discount on Bonds Payable / Cr Bonds Payable (face) drill |
| Bonds issued at a premium | Dr Cash / Cr Bonds Payable (face), Cr Premium on Bonds Payable drill |
| Interest, straight-line discount | Dr Interest Expense / Cr Cash (coupon), Cr Discount on Bonds Payable (discount / periods) drill |
| Interest, effective-interest premium | Dr Interest Expense (carrying value x market rate), Dr Premium on Bonds Payable / Cr Cash (coupon) drill |
| Retire bonds at maturity | Dr Bonds Payable / Cr Cash drill |
| Early retirement at a loss | Dr Bonds Payable, Dr Loss on Retirement, (Dr Premium or Cr Discount) / Cr Cash drill |
| Finance lease at commencement | Dr Right-of-Use Asset / Cr Lease Liability (PV of payments) drill |
| First finance lease payment | Dr Lease Liability, Dr Interest Expense / Cr Cash; and Dr Amortization Expense / Cr ROU Asset drill |
| Operating lease payment (lessee) | Dr Lease Expense / Cr Cash (single straight-line cost) |
Rules of thumb
| Which side increases | Assets, Expenses, Dividends: debit. Liabilities, Equity, Revenue: credit. |
| Contra accounts | Accumulated Depreciation, Allowance for Doubtful Accounts, Sales Returns, Discount on Bonds: opposite side of their parent. |
| Cash moves only when cash moves | A bill received is Accounts Payable; a sale on account is Accounts Receivable. |
| Adjusting entries never touch Cash | They move amounts between balance sheet and income statement accounts. |
| Expense when used, not when paid | Prepaids become expenses as time passes or supplies are consumed. |
| Revenue when earned, not when collected | Advances are Unearned Revenue until the work is done. |
| Normal balances | An account's normal balance is the side that increases it. |
| Trial balance check | Total of debit balances = total of credit balances; it does not prove the right accounts were used. |
journaldrill.com: practice every one of these with instant checking. 85 entries.
Questions
How do I remember which side is which?
DEAD CLER: Debits increase Expenses, Assets and Dividends; Credits increase Liabilities, Equity and Revenue. Everything else follows: to decrease an account, use the other side.
Why is paying a supplier not an expense?
The expense (or the inventory) was recorded when the goods or the bill arrived, with a credit to Accounts Payable. Paying later only settles the liability: debit Accounts Payable, credit Cash.
Perpetual or periodic inventory?
This sheet uses perpetual: Inventory and Cost of Goods Sold move with every purchase and sale. Under periodic, purchases go to a Purchases account and COGS is computed at period end from the count.
What is the difference between a write-off and bad debt expense?
Bad debt expense is the estimate recorded at period end (debit expense, credit Allowance). A write-off removes a specific uncollectible account against the Allowance and records no expense, because the expense was already estimated.
Which entries are on accounting exams most?
Adjusting entries (prepaids, accruals, depreciation, unearned revenue), closing entries, merchandise with discounts and returns, bad debts by both methods, notes with interest, and asset disposals with a gain or loss.
A cheat sheet does not make them stick
Doing them with instant checking does. The free exercises need no account.
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